<PAGE>
Registration No. 333-
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-----------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------------------
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
----
Post-Effective Amendment No. [ ]
----
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. [ ]
----
(Check appropriate box or boxes)
--------------------------------
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
(Exact Name of Registrant)
--------------------------------
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
(Name of Depositor)
1290 Avenue of the Americas, New York, New York 10104
(Address of Depositor's Principal Executive Offices)
Depositor's Telephone Number, including Area Code: (212) 554-1234
MARY JOAN HOENE
Vice President and Counsel
The Equitable Life Assurance Society of the United States
1290 Avenue of the Americas, New York, New York 10104
(Names and Addresses of Agents for Service)
-----------------------------------------
Please send copies of all communications to: (201)392-5279
PETER E. PANARITES John R. Towers
Freedman, Levy, Kroll & Simonds Senior Vice President
1050 Connecticut Avenue, N.W., and General Counsel
Suite 825 State Street Bank and Trust Company
Washington, D.C. 20036 225 Franklin Street
Boston, MA 02110
-----------------------------------------
CALCULATION OF REGISTRATION FEE UNDER
THE SECURITIES ACT OF 1933
<TABLE>
<CAPTION>
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Title of Securities Being Amount Being Registered Proposed Maximum Proposed Maximum Amount of Registration
Registered Offering Price per Unit* Aggregate Offering Fee(2)
Price*
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<S> <C> <C> <C> <C>
Units of Interest
Under Group Annuity
Contract 130,000,000 130,000,000 36,140
(1) (1)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Estimated soley for purpose of determining the registration fee.
(1) The Contract does not provide for a predetermined amount or number of units
(2) Of the $120,000,000 of units of interest under group annuity contracts
registered under Registration Statement No. 333-50967, $82,153,932, for
which a filing fee of $24,235 was previously paid, are being carried
forward.
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of this registration statement.
The Registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
American Dental Association
Members Retirement Program
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PROSPECTUS
MAY 1, 1999 [GRAPHIC OMITTED]
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GROWTH EQUITY FUND [GRAPHIC OMITTED]
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AGGRESSIVE EQUITY FUND [GRAPHIC OMITTED]
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ADA FOREIGN FUND [GRAPHIC OMITTED]
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EQUITY INDEX FUND [GRAPHIC OMITTED]
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EQUITY INCOME FUND [GRAPHIC OMITTED]
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LIFECYCLE FUND-CONSERVATIVE [GRAPHIC OMITTED]
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LIFECYCLE FUND-MODERATE [GRAPHIC OMITTED]
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REAL ESTATE FUND [GRAPHIC OMITTED]
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GUARANTEED RATE ACCOUNTS [GRAPHIC OMITTED]
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MONEY MARKET GUARANTEE ACCOUNT [GRAPHIC OMITTED]
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<PAGE>
American Dental Association
Members Retirement Program
PROSPECTUS DATED MAY 1, 1999
- --------------------------------------------------------------------------------
Please read this prospectus and keep it for future reference. It contains
important information you should know before participating or taking any other
action under the Program.
ABOUT THE ADA PROGRAM
The Program provides members of the American Dental Association and their
eligible employees several plans for the accumulation of retirement savings on
a tax-deferred basis. Eleven investment options - eight investment funds and
three guaranteed options are available under the plans. The investment funds
and guaranteed options comprise the "investment options" covered by this
prospectus and our separate prospectus referred to below. The investment
funds, below, are offered by The Equitable Life Assurance Society of the
United States.
- --------------------------------------------------
INVESTMENT FUNDS
- --------------------------------------------------
o Growth Equity Fund o Real Estate Fund
o Aggressive Equity o Equity Income Fund*
Fund o Lifecycle Fund -
o ADA Foreign Fund Moderate
o Equity Index Fund o Lifecycle Fund -
Conservative
- --------------------------------------------------
* Available on or about July 1, 1999.
The Growth Equity Fund is managed by Equitable Life.
The Real Estate Fund invests primarily in units of Equitable Life's Prime
Property Fund.
The Aggressive Equity Fund, ADA Foreign Fund, Equity Index Fund and Equity
Income Fund respectively invest in shares of the following mutual funds: MFS
Emerging Growth Fund, Templeton Foreign Fund - Class A, State Street Global
Advisors (SSgA) S&P 500 Index Fund, and Putnam Equity Income Fund ("Underlying
Mutual Funds"). You should also read the prospectuses for the Underlying
Mutual Funds and keep them for future reference.
The Lifecycle Funds - Conservative and Moderate ("Lifecycle Funds") each
invest in units of a corresponding group trust ("Lifecycle Fund Group Trusts")
maintained by State Street Bank and Trust Company ("State Street").
The Equity Index Fund and the Lifecycle Funds are described, in detail, in a
separate prospectus for those investment funds. You may obtain a copy of that
prospectus, or of any Underlying Mutual Fund prospectus, by writing or calling
us toll-free. See "How To Reach Us" on the back cover.
The Guaranteed Options include a 3-year Guaranteed Rate Account and 5-year
Guaranteed Rate Account, and the Money Market Guarantee Account.
We have filed registration statements relating to this offering with the
Securities and Exchange Commission. A Statement of Additional Information
("SAI"), dated May 1, 1999, which is part of the registration statements, is
available free of charge upon request by writing to us or calling us
toll-free. The SAI has been incorporated by reference into this prospectus.
The table of contents for the SAI and a request form to obtain the SAI appear
at the end of this prospectus. You may also obtain a copy of this prospectus
and the SAI through the SEC web site at www.sec.gov.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THE SECURITIES ARE NOT
INSURED BY THE FDIC OR ANY OTHER AGENCY. THEY ARE NOT DEPOSITS OR OTHER
OBLIGATIONS OF ANY BANK AND ARE NOT BANK GUARANTEED. THEY ARE SUBJECT TO
INVESTMENT RISKS AND POSSIBLE LOSS OF PRINCIPAL.
<PAGE>
Contents of this prospectus
1
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ADA PROGRAM
<TABLE>
<S> <C>
Index of key words and phrases 3
The Program at a glance - key features 4
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1 FEE TABLE 6
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Program expense charge and investment fund operating
expenses 6
Examples 9
Condensed Financial Information 10
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2 PROGRAM INVESTMENT OPTIONS 11
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Investment options - the Equity Funds 11
Additional information about the Equity Funds 15
The Real Estate Fund 15
Special risks related to the Real Estate Fund 18
Investment options - the Guaranteed Options 19
- ----------------------------------------------------------
3 HOW WE VALUE YOUR ACCOUNT BALANCE IN
THE INVESTMENT FUNDS 22
- ----------------------------------------------------------
When we use the words "we," "us" and "our," we mean Equitable Life.
When we address the reader of this prospectus with words such as "you" and
Please see the index of key words and phrases used in this prospectus. The
"your," we generally mean the individual participant in one or more of the
index will refer you to the page where particular terms are defined or
plans available in the Program unless otherwise explained. For example, "The
explained.
Program" section of the prospectus is primarily directed at the employer.
</TABLE>
<PAGE>
2
<TABLE>
<S> <C>
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4 TRANSFERS AND ACCESS TO YOUR ACCOUNT 23
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Transfers among investment options 23
Our account investment management system 23
Participant loans 23
Choosing benefit payment options 24
Spousal consent 24
Benefits payable after the death of the participant 24
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5 THE PROGRAM 26
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Eligible employers 26
Summary of plan choices 26
Getting started 27
How to make Program contributions 27
Allocating Program contributions 27
Distributions from the investment options 28
Rules applicable to participant distributions 29
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6 PERFORMANCE INFORMATION 30
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Annual percentage change in fund unit values 31
Average annual percentage change in fund unit value 31
How we calculate performance data 32
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7 CHARGES AND EXPENSES 33
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Charges based on amounts invested in the Program 33
Plan and transaction charges 35
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8 TAX INFORMATION 36
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Income taxation of distribution to qualified plan
participants 36
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9 MORE INFORMATION 38
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About Program changes or terminations 38
IRS disqualification 38
About the separate accounts 38
About our Year 2000 progress 39
About legal proceedings 39
About our independent accountants 40
Reports we provide and available information 40
Acceptance 40
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APPENDIX I: CONDENSED FINANCIAL
INFORMATION A-1
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- -------------------------------------------------------------------
TABLE OF CONTENTS OF STATEMENT OF
ADDITIONAL INFORMATION S-1
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Investment Option Characteristics fold-out
About Equitable Life fold-out
How to Reach Us back cover
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</TABLE>
<PAGE>
ADA Program
3
- --------------------------------------------------------------------------------
INDEX OF KEY WORDS AND PHRASES
This index should help you locate more information on the terms used in this
prospectus.
<TABLE>
<CAPTION>
PAGE
<S> <C>
AIM System 23
beneficiary 24
benefit payment options 24
business day 23
contributions 27
eligible rollover distributions 36
Equitable Life fold-out
Equity Funds 11
group annuity contract 26
GRAs 19
guaranteed options 19
individually designed plan 26
IRA 36
investment funds cover
investment options 11
Lifecycle Funds 14
Lifecycle Fund Group Trusts 14
Master Plan 26
Master Trust 26
Money Market Guarantee Account 20
Pooled Trust 26
Prime Property Fund 15
Program 26
Self Directed Prototype Plan 26
separate accounts 38
SSgA State Street 13
Trustees 26
Underlying Mutual Funds cover
Underlying State Street Funds 14
unit value 22
unit 22
3-year GRA 19
5-year GRA 19
</TABLE>
<PAGE>
ADA Program
4
- --------------------------------------------------------------------------------
THE PROGRAM AT A GLANCE - KEY FEATURES
EMPLOYER CHOICE OF RETIREMENT PLANS
Our Master Plan is a defined contribution master plan that can be adopted as a
profit-sharing plan (401(k), SIMPLE 401(k) and safe harbor 401(k) features are
available) and a defined contribution pension plan, or both. The Program's
investment options are the only investment choices under the Master Plan.
Our Self-Directed Prototype Plan gives added flexibility in choosing your
investments.
If you maintain your own individually-designed plan you may use the investment
options in the Program through our Pooled Trust.
PLAN FEATURES
MASTER PLAN:
o Program investment options used as the only investment choices.
o Plan-level and participant-level recordkeeping, benefit payments, tax
withholding and reporting provided.
o Use of our Master Trust.
o No minimum amount must be invested.
SELF-DIRECTED PROTOTYPE PLAN:
o You may combine Program investment options with individual stock and bond
investments.
o Our Pooled Trust is adopted for investment use only, and a minimum of
$25,000 must be maintained in the Trust.
o Recordkeeping services provided only for plan assets in Pooled Trust.
o Third party recordkeeping services can be arranged through us.
o Brokerage services can be arranged through us.
INVESTMENT ONLY:
o Our Pooled Trust is adopted for investment use only.
o Recordkeeping services provided for plan assets in Pooled Trust.
PROFESSIONAL INVESTMENT MANAGEMENT
These professional investment managers advise or sponsor the seven different
Equity Funds and the Real Estate Fund:
o Alliance Capital Management L.P.
o State Street Global Advisors
o Massachusetts Financial Services Company
o Templeton Global Advisors Ltd.
o Putnam Investments, Inc.
o Lend Lease Real Estate Investments, Inc.
GUARANTEED OPTIONS
The three guaranteed options include two Guaranteed Rate Accounts and a Money
Market Guarantee Account.
TAX ADVANTAGES
o On earnings
o No tax on investment earnings until withdrawn.
o On transfers
o No tax on internal transfers.
Because you are buying a contract to fund a retirement plan that already
provides tax deferral under Federal income tax rules, you should do so for the
contract's features and benefits other than tax deferral. The tax deferral of
the contract does not provide additional benefits.
<PAGE>
5
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CHARGES AND EXPENSES
o Program expense charge assessed against combined value of Program assets.
o Investment management and administration fees and other expenses charged on
an investment fund-by-fund basis, as applicable.
o Plan and transaction charges that vary by type of plan adopted, or by
specific transaction.
o Indirectly, charges of underlying investment vehicles for investment
management, 12b-1 fees and other expenses.
BENEFIT PAYMENT OPTIONS
o Lump sum.
o Installments on a time certain or dollar certain basis.
o Variety of annuity benefit payout options as available under your
employer's plan.
o Fixed or variable annuity options available.
ADDITIONAL FEATURES
o Toll-free number available for transfers and account information.
o Participant loans (if elected by your employer; some restrictions apply).
o Regular statements of account.
o Retirement Program Specialist and Account Executive support.
o Daily valuation of accounts.
o 5500 reporting.
o For Master Plan, automatic updates for law changes.
<PAGE>
1 Fee table
6
- --------------------------------------------------------------------------------
The fee tables and discussion below will help you understand the various
charges and expenses you will bear under the Program. The tables reflect
charges: (1) you will directly incur, including Program Expense charge,
administration fee, investment management fee and other expenses, and (2) fees
and expenses of the Underlying Mutual Funds, and the Lifecycle Group Trusts and
their underlying collective funds ("Underlying State Street Funds") you will
indirectly incur. Certain other Program charges also apply as described under
"Plan and Transaction Expenses." If you annuitize your account, charges for
premium taxes and other fees may apply.
WHEN YOU PURCHASE OR REDEEM UNITS OF ANY OF THE INVESTMENT FUNDS YOU WILL PAY
NO SALES LOAD, NO DEFERRED SALES CHARGE, NO SURRENDER FEES AND NO TRANSFER OR
EXCHANGE FEES.
PROGRAM EXPENSE CHARGE AND INVESTMENT FUND OPERATING EXPENSES
The Program expense charge and investment fund operating expenses are paid out
of each investment fund's assets. The Growth Equity and Real Estate Funds each
pay us an investment management fee that varies based on their respective
assets. No investment management fees are paid to us by the Aggressive Equity
Fund, ADA Foreign Fund, Equity Index Fund, Equity Income Fund or Lifecycle
Funds. The Program expense charge is based partly on the level of assets under
the Program and partly on the number of plans. An administration fee is based
on investment fund assets. Each investment fund also incurs other expenses for
services such as printing, mailing, legal, and similar items. All of these
operating expenses are reflected in each investment fund's unit value. See "How
We Value Your Account."
The tables that follow summarize the charges, at annual percentage rates, that
apply to the investment funds. They do not include other charges which are
specific to the various plans, such as enrollment fees or record maintenance
and report fees. See "Charges and Expenses," for more details. THE EXPENSES
SHOWN FOR THE INVESTMENT FUNDS ARE BASED ON AVERAGE PROGRAM ASSETS IN EACH OF
THE INVESTMENT FUNDS DURING THE YEAR ENDED DECEMBER 31, 1998, AND REFLECT
APPLICABLE FEES.
GROWTH EQUITY AND REAL ESTATE FUNDS
<TABLE>
<CAPTION>
INVESTMENT FUND OPERATING EXPENSES
----------------------------------------------
INVESTMENT
PROGRAM EXPENSE ADMINISTRATION MANAGEMENT OTHER
FUND CHARGE FEE FEE EXPENSES TOTAL
- ---------------------- ------------------ ----------------- ------------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Growth Equity 0.64% 0.15% 0.22% 0.04% 1.05%
Real Estate 0.64% 0.25% 1.10% 0.21% 2.20%
</TABLE>
AGGRESSIVE EQUITY, ADA FOREIGN, EQUITY INDEX AND EQUITY INCOME FUNDS
The Aggressive Equity, ADA Foreign, Equity Index and Equity Income Funds each
invest in shares of an Underlying Mutual Fund. The following table shows, at
annual percentage rates, the charges and fees which are deducted from each of
these investment funds and the Underlying Mutual Fund. No transaction charges
are incurred by the investment funds when shares of the Underlying Mutual Fund
are purchased or redeemed, but operating expenses of the Underlying Mutual
Funds are indirectly incurred. For a detailed description of charges and
expenses incurred by the Underlying Mutual Funds, please see their
prospectuses. THE EXPENSES SHOWN FOR THE UNDERLYING MUTUAL FUNDS ARE EXPRESSED
AS A PERCENTAGE OF THEIR RESPECTIVE AVERAGE DAILY NET ASSETS.
<PAGE>
7
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROGRAM INVESTMENT
EXPENSE ADMINISTRATION MANAGEMENT
CHARGE FEE FEE
---------- -------------------- -----------------
<S> <C> <C> <C>
Aggressive Equity Fund 0.64% 0.15%(2) None
MFS Emerging Growth Fund (1) None None 0.69%
-------------------------------------------
TOTAL 0.64% 0.15%(2) 0.69%
- -----------------------------------------------------------------------------------
ADA Foreign Fund 0.64% 0.15%(4) None
Templeton Foreign Fund Class A (3) None None 0.61%
-------------------------------------------
TOTAL 0.64% 0.15%(4) 0.61%
- -----------------------------------------------------------------------------------
Equity Index Fund 0.64% 0.15% None
SSgA S&P 500 Index Fund (after
waivers) (5) None None 0.01% (6)
--------------------------------------------
TOTAL 0.64% 0.15% 0.01% (6)
- ------------------------------------------------------------------------------------
Equity Income Fund 0.64% 0.15%(9) None
Putnam Equity Income Fund (8) None None 0.59%
--------------------------------------------
TOTAL 0.64% 0.15%(9) 0.59%
- ------------------------------------ --------------------------------------------
<CAPTION>
OTHER
EXPENSES 12B-1 FEE TOTAL
------------------- ------------ -------------------
<S> <C> <C> <C>
Aggressive Equity Fund 0.08% None 0.87%(2)
MFS Emerging Growth Fund (1) 0.22% 0.25% 1.16%
---------------------------------------------
TOTAL 0.30% 0.25% 2.03%(2)
- ---------------------------------------------------------------------------------------
ADA Foreign Fund 0.10% None 0.89%(4)
Templeton Foreign Fund Class A (3) 0.26% 0.25% 1.12%
---------------------------------------------
TOTAL 0.36% 0.25% 2.01%(4)
- ---------------------------------------------------------------------------------------
Equity Index Fund 0.17%(7) None 0.96%
SSgA S&P 500 Index Fund (after
waivers) (5) 0.09% 0.08% 0.18%(6)
---------------------------------------------
TOTAL 0.26%(7) 0.08% 1.14%(6)
- ---------------------------------------------------------------------------------------
Equity Income Fund 0.14% None 0.93%(9)
Putnam Equity Income Fund (8) 0.22% 0.25% 1.06%
---------------------------------------------
TOTAL 0.36% 0.25% 1.99%(9)
- ---------------------------------------------------------------------------------------
</TABLE>
(1) Source: MFS Emerging Growth Fund prospectus dated April 1, 1999.
(2) An administration fee of up to 0.25% of the average daily net assets of
the Program invested in the MFS Emerging Growth Fund is paid to Equitable
Life by MFS Fund Distributors, Inc. ("MFS Distributors"). Equitable Life
has waived the 0.15% administration fee applicable to the Aggressive
Equity Fund and will use the payment from MFS Distributors, to defray
administrative expenses associated with the Program's operations and to
fund Program enhancements. The agreement and waiver are expected to be in
effect for an indefinite period, but these arrangements are subject to
termination by either party upon notice.
(3) Source: Templeton Foreign Fund prospectus dated January 1, 1999.
(4) The Templeton Foreign Fund-Class A Rule 12b-1 plan is described in the
Templeton Foreign Fund's prospectus. Templeton Foreign Fund pays
Equitable Life an amount equal to the 0.25% Rule 12b-1 fee for services
Equitable Life performs for Templeton Foreign Fund. Equitable Life has
waived the 0.15% administration fee applicable to the ADA Foreign Fund
and will use the payment from Templeton Foreign Fund to defray
administrative expenses associated with the Program's operations and to
fund Program enhancements. The agreement and waiver are expected to be in
effect for an indefinite period, but these arrangements are subject to
termination by either party upon notice.
(5) Source: SSgA S&P 500 Index Fund Prospectus dated December 29, 1998.
(6) State Street has voluntarily agreed to waive up to the full amount of its
management fee of .10% of average daily net assets to the extent that
total operating expenses exceed .18% of average daily net assets on an
annual basis. The total operating expenses of the SSgA S&P 500 Index Fund
absent the waiver would be .27% of average daily net assets on an annual
basis. The gross annual management expense before the fee waiver would be
.10% of average daily net assets. This agreement will remain in effect
for the current fiscal year of the SSgA S&P 500 Index Fund. If the waiver
agreement is terminated, the full amount of State Street's management fee
may be assessed and the total Equity Index Fund expenses may increase.
(7) Includes organizational expenses of $33,917 that were initially paid by
Equitable Life and reimbursed over a five year period ended December 31,
1998.
(8) Source: Putnam Equity Income Fund prospectus dated March 30, 1998.
(9) The Putnam Equity Income Fund - Class A Rule 12b-1 plan is described in
the Putnam Equity Index Fund's prospectus. Putnam Equity Income Fund pays
Equitable Life an amount equal to the 0.25% Rule 12b-1 fee for services
Equitable Life performs for Putnam Equity Index Fund. Equitable Life has
waived the 0.15% administration fee applicable to the ADA Equity Income
Fund and will use the payment from Putnam Equity Income Fund to defray
administrative expenses associated with the Program's operations and to
fund Program enhancements. The agreement and waiver are expected to be in
effect for an indefinite period, but these arrangements are subject to
termination by either party upon notice.
<PAGE>
8
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LIFECYCLE FUNDS
No transaction charges are incurred by the Lifecycle Funds when units of a
corresponding Lifecycle Fund Group Trust are purchased or redeemed, but annual
operating expenses are incurred by each Lifecycle Fund Group Trust. A deduction
is made from the assets of each Lifecycle Fund Group Trust to compensate State
Street for managing the assets of the Lifecycle Fund Group Trusts.
The fees and charges which are deducted from the assets of the Lifecycle Funds,
the Lifecycle Fund Group Trusts and the Underlying State Street Funds are shown
in the table below. For a detailed description of the fee and charge
arrangements involving the Lifecycle Funds, Lifecycle Fund Group Trusts and
Underlying State Street Funds, please see our separate prospectus for the
Equity Index Fund and the Lifecycle Funds. THE EXPENSES SHOWN FOR EACH OF THE
LIFECYCLE FUND GROUP TRUSTS AND UNDERLYING STATE STREET FUNDS ARE EXPRESSED AS
A PERCENTAGE OF THEIR RESPECTIVE AVERAGE NET ASSETS FOR 1998.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
PROGRAM INVESTMENT
EXPENSE ADMINISTRATION MANAGEMENT OTHER
CHARGE FEE FEE EXPENSES TOTAL
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Lifecycle Fund-Conservative 0.64% 0.15% None 0.54%(1) 1.33%
Lifecycle Fund
Group Trust-Conservative None 0.11%(2) 0.17% 0.15%(1&3) 0.43%
Underlying Funds:
S&P 500 Flagship Fund None None None -%(4&5) -%(5)
Russell 2000 Fund None -%(5) None 0.04%(4) 0.04%
Daily EAFE Non-Lending Fund None None None 0.11%(4) 0.11%
Daily Government/Corporate Bond
Fund None None None 0.01%(4) 0.01%
Short Term Investment Fund None None None -%(4&5) -%(5)
- -------------------------------------------------------------------------------------------------------------------
TOTAL 0.64% 0.26% 0.17% 0.71%(6) 1.78%(6)
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
9
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
PROGRAM INVESTMENT
EXPENSE ADMINISTRATION MANAGEMENT OTHER
CHARGE FEE FEE EXPENSES TOTAL
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Lifecycle Fund-Moderate 0.64% 0.15% None 0.19%(1) 0.98%
Lifecycle Fund
Group Trust-Moderate None 0.01%(2) 0.17% 0.01%(1&3) 0.19%
Underlying Funds:
S&P 500 Flagship Fund None None None -%(4&5) -%(5)
Russell 2000 Fund None -%(5) None 0.04%(4) 0.04%
Daily EAFE Non-Lending Fund None None None 0.11%(4) 0.11%
Daily Government/Corporate Bond
Fund None None None 0.01%(4) 0.01%
Short Term Investment Fund None None None -%(4&5) -%(5)
- -------------------------------------------------------------------------------------------------------------------
TOTAL 0.64% 0.16% 0.17% 0.22%(6) 1.19%(6)
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) These include a charge at the annual rate of .03% of the value of the
respective assets in the Lifecycle Funds-Conservative and Moderate to
compensate Equitable Life for additional legal, accounting and other
potential expenses resulting from the inclusion of the Lifecycle Fund
Group Trusts and Underlying State Street Funds maintained by State Street
among the investment options described in this prospectus and the SAI.
Other expenses also include $150,087 of costs incurred by Equitable Life
and State Street in the organization of the Lifecycle Funds. These costs
are being reimbursed from the Lifecycle Funds, over a five year period,
pro rata based on the assets of each of those investment funds, ending
June 30, 2000. On December 8, 1995, the Program's balance in the Balanced
Fund (approximately $70 million) was transferred to the Lifecycle
Fund-Moderate. The much larger balance in that Fund results in a much
lower ratio of other expenses to total assets compared to the
corresponding ratio for the Lifecycle Fund-Conservative.
(2) Based on the Lifecycle Fund Group Trusts-Conservative and Moderate
current fixed fee of $12,000 per year, per fund, and average net assets
for 1998.
(3) Based on the Lifecycle Fund Group Trusts-Conservative and Moderate
average net assets for 1998.
(4) Other expenses of the Underlying State Street Funds are based on expenses
incurred by each Fund during 1998.
(5) Less than 0.01%.
(6) These totals are based upon a weighted average of the other expenses for
each Underlying State Street Fund. In calculating the weighted average,
expenses for each Underlying State Street Fund were multiplied by their
respective target percentages within their respective Group Trust. See
"Lifecycle Funds-Conservative" and "Lifecycle Funds-Moderate" for a
description of the targeted percentage weightings of the Lifecycle Fund
Group Trusts-Conservative and Moderate.
EXAMPLES
You would pay the expenses shown below on a $1,000 initial investment over the
time period indicated for each investment fund listed below, assuming a 5%
annual rate of return. The examples include all annual fund operating expenses
plus an estimate of average plan and transaction charges over the time periods
indicated, assuming the account is not annuitized. The estimate is computed by
aggregating all record maintenance and report fees and enrollment fees, divided
by the average assets for the same period. See "Plan and Transaction Expenses."
As the minimum amount that can be converted to an annuity is $5,000, the amount
accumulated from the $1,000 contribution could not be paid in the form of an
annuity at the end of any of the periods shown in the examples. There are no
surrender charges, so the amounts would be the same, whether you withdraw all
or a portion of your Account Balance.
<PAGE>
10
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
INVESTMENT FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Growth Equity $ 10.98 $ 34.25 $ 59.35 $ 131.11
Aggressive Equity(1) 20.90 64.52 110.66 238.07
Real Estate 22.61 69.68 119.31 255.49
ADA Foreign(1) 20.70 63.92 109.64 236.00
Equity Index (1) 11.80 36.75 63.63 140.27
Equity Income(1) 20.50 63.30 - -
Lifecycle-Conservative 18.36 56.82 97.71 211.64
Lifecycle-Moderate 12.44 38.74 67.02 147.48
- --------------------------------------------------------------------------------
</TABLE>
(1) The expenses shown reflect the arrangements discussed in notes (2), (4),
(6) and (9) to the fee table above relating to these investment funds.
The purpose of these tables and examples is to assist you in understanding the
various costs and expenses that will be incurred, either directly or
indirectly, when amounts are invested in the Funds. FUTURE EXPENSES MAY BE
GREATER OR LESS THAN THOSE SHOWN. IN ADDITION, THE 5% RATE OF RETURN IN THE
EXAMPLE IS NOT AN ESTIMATE OR GUARANTEE OF FUTURE PERFORMANCE.
We may deduct a $350 annuitization fee if you elect a variable annuity payment
option. Assuming an annuity payout option could be issued, the expenses shown
in the above example would, in each case, be increased by $4.43 based on the
average amount applied to annuity payout options in 1998.
CONDENSED FINANCIAL INFORMATION
Please see APPENDIX I at the end of this prospectus for condensed financial
information concerning the Growth Equity Fund and Real Estate Fund, and unit
value and number of units outstanding information for the Aggressive Equity
Fund, ADA Foreign Fund, Equity Index Fund and Lifecycle Funds.
FINANCIAL STATEMENTS OF INVESTMENT FUNDS
Each of the investment funds is, or is part of, one of our separate accounts as
described in "About the Separate Accounts" under "More Information." The
financial statements for the Growth Equity Fund (Separate Account No. 4
(Pooled)), Aggressive Equity Fund (Separate Account No. 200), ADA Foreign Fund
(Separate Account No. 191) and Real Estate Fund (Separate Account No. 30), and
our Prime Property Fund (Separate Account No. 8) in which the Real Estate Fund
invests, may be found in the SAI for this prospectus. Financial statements for
the Equity Income Fund (Separate Account No. 206) are not included as this Fund
has not previously been available under the Program.
Financial statements for the Equity Index Fund (Separate Account No. 195),
Lifecyle Fund - Conservative (Separate Account No. 197) and Lifecycle
Fund-Moderate (Separate Account No. 198), are found in our separate SAI for
those investment funds.
<PAGE>
2 Program Investment Options
11
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You may choose from ELEVEN INVESTMENT OPTIONS under the Program. These are the
Real Estate Fund and the other seven investment funds we call the "Equity
Funds." You can also choose from three guaranteed options: a 3-year Guaranteed
Rate Account and a 5-year Guaranteed Rate Account ("GRAs"), and our Money
Market Guarantee Account.
THE EQUITY FUNDS
Each Equity Fund has a different investment objective. The Equity Funds try to
meet their investment objectives by investing either in a portfolio of
securities or by holding mutual fund shares or units in a group trust. We
cannot assure you that any of the Equity Funds will meet their investment
objectives.
THE GROWTH EQUITY FUND
OBJECTIVE
The Growth Equity Fund seeks to achieve long-term growth of capital by
investing in the securities of companies that we believe will share in the
growth of our nation's economy-and those of other leading industrialized
countries-over a long period.
INVESTMENT MANAGER
We manage the Growth Equity Fund. We currently use the personnel and facilities
of Alliance Capital Management L.P. ("Alliance") for portfolio management,
securities selection and transaction services. We are the indirect
majority-owners of Alliance, a publicly-traded limited partnership. We and
Alliance are each registered investment advisers under the Investment Advisers
Act of 1940.
Alliance acts as investment adviser to various separate accounts and general
accounts of Equitable Life and other affilliated insurance companies. Alliance
also provides investment management and advisory 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. As of December 31, 1998, Alliance had
total assets under management of $286 billion. Alliance's main office is
located at 1345 Avenue of the Americas, New York, New York 10105.
INVESTMENT STRATEGIES
The Fund maintains its own portfolio of securities. The Growth Equity Fund
invests primarily in common stocks. The Fund generally invests in securities of
intermediate and large sized companies, but may invest in stocks of companies
of any size. At times the Fund may invest its equity holdings in a relatively
small number of issuers, provided that no investment when made causes more than
10% of the Growth Equity Fund's assets to be invested in the securities of one
issuer.
The Growth Equity Fund also may invest smaller amounts in other equity-type
securities, such as convertible preferred stocks or convertible debt
instruments. The Fund also may invest in non-equity investments, including
non-participating and non-convertible preferred stocks, bonds and debentures.
The Fund's non-equity investments could be substantial if we believe that the
Fund will not meet its investment objectives by buying common stock and other
equity-type securities. The Fund also may invest up to 10% of its total assets
in restricted securities (securities not freely traded) and up to 15% of its
total assets in foreign securities (securities of established foreign companies
without substantial business in the United States.)
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As a defensive strategy, the Growth Equity Fund may make temporary investments
in government obligations, short-term commercial paper and other money market
instruments, either directly or through our Separate Account No. 2A, which
invests in such securities. The Fund would not be pursuing its investment
objective when using this temporary defensive strategy.
RISKS OF INVESTMENT STRATEGIES
Investing in common stocks and other securities involves the risk that the
value of the stocks or securities purchased will fluctuate. These fluctuations
could occur for a single company, an industry, a sector of the economy, or the
stock market as a whole. These fluctuations could cause the value of the Growth
Equity Fund's investments - and, therefore, the value of the Fund's units - to
fluctuate, and you could lose money.
Market and financial risks are inherent in any securities investment. By market
risks, we mean factors which do not necessarily relate to a particular issuer,
but affect the way markets, and securities within those markets, perform.
Market risks can be described 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. Important factors associated with the Growth Equity
Fund are discussed below.
In addition to large sized companies, the Growth Equity Fund may invest in
securities of medium and small sized companies. The securities of small and
medium sized, less mature, lesser known companies involves greater risks than
those normally associated with larger, more mature, well-known companies.
Therefore, consistent earnings may not be as likely in small companies as in
large companies.
The Growth Equity Fund runs a risk of increased and more rapid fluctuations in
the value of its investments in securities of small or medium sized companies.
This is due to the greater business risks of small size and limited product
lines, markets, distribution channels, and financial and managerial resources.
Historically, the price of small (less than $2 billion) and medium (between $2
and $10 billion) capitalization stocks and stocks of recently organized
companies have fluctuated more than the larger capitalization stocks and the
overall stock market. One reason is that small- and medium-sized companies have
less certain prospects for growth, a lower degree of liquidity in the markets
for their stocks, and greater sensitivity to changing economic conditions.
Finally, concentrating the Growth Equity Fund's equity holdings in the stocks
of a few companies also increases the risk of loss because a decline in the
value of one of these stocks would have a greater impact on the Fund. As of
December 31, 1998, the Fund held 27.4% of its net assets in the stocks of four
issuers. See Separate Account No. 4 (Pooled) Statement of Investments and Net
Assets in the SAI.
Investing in non-equity securities, such as bonds and debentures, involves the
risk that the value of these securities held by the Growth Equity Fund - and,
therefore, the value of the Fund's units - will fluctuate with changes in
interest rates (interest rate risk) and the perceived ability of the issuer to
make interest or principal payments on time (credit risk). Moreover,
convertible securities, such as convertible preferred stocks or convertible
debt instruments, contain both debt and equity features, and may lose
significant value in periods of extreme market volatility.
Investing in securities of foreign companies involves additional risks,
including risk of loss from changes in the political or economic climate of the
countries in which these companies do business. Foreign currency fluctuations,
exchange controls or financial instability could cause the value of the Growth
Equity Fund's foreign investments to fluctuate. Additionally, foreign
<PAGE>
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accounting, auditing and disclosure standards may differ from domestic
standards, and there may be less regulation in foreign countries of stock
exchanges, brokers, banks, and listed companies than in the United States. As a
result, the Fund's foreign investments may be less liquid and their prices may
be subject to greater fluctuations than comparable investments in securities of
U.S. issuers.
Investing in restricted securities involves additional risks because these
securities generally (1) are less liquid than non-restricted securities and (2)
lack readily available market quotations. Accordingly, the Growth Equity Fund
may be unable to quickly sell its restricted security holdings at fair market
value.
THE AGGRESSIVE EQUITY, ADA FOREIGN, EQUITY INDEX AND EQUITY INCOME FUNDS
The Aggressive Equity, ADA Foreign, Equity Index and Equity Income Funds each
invest in shares of an Underlying Mutual Fund. The investment results you will
experience in any one of those investment funds will depend on the investment
performance of the Underlying Mutual Funds. The table below shows the names of
the Underlying Mutual Funds, their investment objectives, and their advisers.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
UNDERLYING MUTUAL FUND
---------------------------------------------------------
INVESTMENT FUND NAME OBJECTIVE ADVISER
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Aggressive Equity MFS Emerging Long-term Massachusetts
Fund Growth Fund growth of capital Financial
Services
Company
- -----------------------------------------------------------------------------
ADA Foreign Templeton Long-term Templeton
Fund Foreign Fund growth of capital Global Advisors
Limited
- -----------------------------------------------------------------------------
Equity Index SSgA S&P 500 Replicate the State Street
Fund Index Fund total return of the Global Advisers
S&P 500 Index (SSgA)
- -----------------------------------------------------------------------------
Equity Income Putnam Growth and Putnam
Fund Equity Income income Investments, Inc.
Fund
- -----------------------------------------------------------------------------
</TABLE>
Each of the Underlying Mutual Funds has been selected by the ADA Trustees. We
have no investment management responsibilities for the Aggressive Equity, ADA
Foreign, Equity Index or Equity Income Funds. As to those Funds, we act in
accordance with the investment policies established by the ADA Trustees.
PLEASE REFER TO THE PROSPECTUSES AND SAIS OF THE UNDERLYING MUTUAL FUNDS FOR A
MORE DETAILED DISCUSSION OF INVESTMENT OBJECTIVES AND STRATEGIES, ADVISERS,
RISK FACTORS AND OTHER INFORMATION CONCERNING THE UNDERLYING MUTUAL FUNDS.
<PAGE>
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LIFECYCLE FUNDS - CONSERVATIVE AND MODERATE
Each Lifecycle Fund invests in a Lifecycle Fund Group Trust. Each Group Trust
has identical investment objectives and policies to the Lifecycle Fund to which
it relates. We have no investment management responsibilities for the Lifecycle
Funds. As to those Funds, we act in accordance with the investment policies
established by the ADA Trustees.
OBJECTIVES
The Lifecycle Fund - Conservative seeks to provide current income and a low to
moderate growth of capital by investing
exclusively in units of the Lifecycle Group Trust - Conservative.
The Lifecycle Fund - Moderate seeks to provide growth of capital and a
reasonable level of current income by investing exclusively in units of the
Lifecycle Group Trust - Moderate.
THE LIFECYCLE FUND GROUP TRUSTS
The Lifecycle Fund Group Trusts are maintained by State Street. Each of the
Group Trusts is organized as a collective investment fund under Massachusetts
law. Because of exclusionary provisions, the Lifecycle Fund Group Trusts are
not subject to regulation under the Investment Company Act of 1940. The
Lifecycle Fund Group Trusts were selected by the ADA Trustees.
State Street serves as the trustee and investment manager to the Lifecycle Fund
Group Trusts. Each of the Group Trusts attempts to achieve its investment
objective by investing in a mix of underlying collective investment funds (the
Underlying State Street Funds) maintained by State Street and offered
exclusively to tax exempt retirement plans. Unlike the Lifecycle Fund Group
Trusts, however, which are available only under the ADA Program, the Underlying
State Street Funds may receive contributions from other tax exempt retirement
plans.
The Lifecycle Fund Group Trusts each seek to achieve their objectives by
investing 100% of their respective assets in a mix of Underlying State Street
Funds in accordance with certain target percentage weightings selected by the
ADA Trustees. The Underlying State Street Funds of the Lifecycle Fund Group
Trust - Conservative and by the Lifecyle Fund - Moderate are:
o S&P 500 Flagship Fund
o Russell 2000 Fund
o Daily EAFE Non-Lending Fund
o Daily Government/Corporate Bond Fund
o Short Term Investment Fund
PLEASE REFER TO OUR SEPARATE PROSPECTUS AND SAI FOR THE EQUITY INDEX FUND AND
THE LIFECYCLE FUNDS FOR MORE DETAILED INFORMATION, INCLUDING STRATEGIES, RISK
FACTORS AND IMPORTANT INFORMATION CONCERNING THE UNDERLYING STATE STREET FUNDS.
<PAGE>
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ADDITIONAL INFORMATION ABOUT THE EQUITY FUNDS
CHANGE OF INVESTMENT OBJECTIVES
The ADA Trustees may change the investment objectives of the Aggressive Equity,
ADA Foreign, Equity Index, Equity Income and the Lifecycle Funds. The ADA
Trustees may also change the mutual fund or collective investment fund in which
any one of these Equity Funds invests. We can change the investment objectives
of the Growth Equity Fund, if the New York State Insurance Department approves
the change.
VOTING RIGHTS
If the MFS Emerging Growth Fund, Templeton Foreign Fund, SSgA S&P 500 Index
Fund or the Putnam Equity Income Fund holds a meeting of shareholders, we will
vote shares held in the corresponding Equity Fund in accordance with
instructions received from employers, participants or trustees, as the case may
be. Shares will be voted in proportion to the voter's interest in the Equity
Fund holding the shares as of the record date for the shareholders meeting. We
abstain from voting shares if we receive no instructions. Employers,
participants or trustees will receive: (1) periodic reports relating to the
Underlying Mutual Funds and (2) proxy materials, together with a voting
instruction form, in connection with shareholder meetings.
THE REAL ESTATE FUND
OBJECTIVE
The Real Estate Fund seeks a stable rate of return over an extended period of
time through rental income and appreciation of real property values. It pursues
this goal by investing primarily in units of our Prime Property Fund (Separate
Account No. 8), which has the same objective. Because of the nature of real
estate investments, to provide a measure of liquidity, the Real Estate Fund
also invests in liquid assets such as our Separate Account No. 2A, which only
invests in short-term securities. We cannot assure you that the Real Estate
Fund or Prime Property Fund will meet their investment objective.
INVESTMENT MANAGER
We manage both the Real Estate Fund and Prime Property Fund. We have retained
Lend Lease Real Estate Investments, Inc. ("Lend Lease") to advise us as to all
our real property acquisitions, management and sales. Lend Lease also
coordinates related accounting and bookkeeping functions with us. Lend Lease
has offices world-wide and throughout the United States. As of December 31,
1998, Lend Lease had approximately $23.7 billion in assets under management.
Lend Lease originates, analyzes, evaluates and recommends commercial real
estate investments for its clients, then manages and services those investments
on an ongoing basis.
INVESTMENT STRATEGIES
Prime Property Fund's principal investment strategy is to acquire and own
well-located, quality, income-producing real estate investments in strong
rental markets throughout the United States. Location, potential income stream,
cost, potential for increasing rental income and capital appreciation, resale
marketability, and architectural and other physical attributes are important
factors considered in the selection of properties. We also evaluate the risks,
including environmental risks, involved with the property, as well as the
probability and potential impact of changes in the local economy. See "Prime
Property Fund Investments" in the SAI for additional information about the
current distribution of investments by property type and location.
<PAGE>
16
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Prime Property Fund does not have a specified holding period for its
properties. The Fund will buy and sell properties at any time. In general,
however, we seek to hold properties for long-term investment.
Prime Property Fund may also invest in: (1) construction and mortgage loans
receivable; (2) notes receivable; (3) developmental properties and (4) forward
commitments (an agreement to purchase property upon completion of construction
or leasing.) Although there are no limits on the amount the Fund can invest in
any one property, we do not intend to invest more than 10% of the Fund's assets
in any one property or in developmental properties.
Prime Property Fund participates in joint ventures, particularly with regard to
large properties. We seek to form joint ventures with persons and companies
who, because of our experience with them or investigation into their financial
condition and business history, we regard as experienced and financially
responsible. Prime Property Fund may issue construction and mortgage loans on a
fixed or variable rate basis in connection with joint ventures in which it
participates. If Prime Property Fund issues fixed rate loans, it may seek to
stabilize the market value of such loans by engaging in interest rate hedging
transactions, to the extent permitted under applicable regulatory requirements.
Prime Property Fund may also engage in transactions and invest in properties
other than or in addition to those described above, including commercial
mortgaged backed securities (CMBS) and shares in real estate investment trusts
(REITs).
Prime Property Fund may use various forms of mortgage financing in connection
with its real estate activities.
Prime Property Fund may also borrow money in order to:
o acquire new properties;
o improve existing investments;
o provide working capital for repairs and improvements; and
o meet other cash flow requirements.
Prime Property Fund may use mortgage financing to acquire properties, may
mortgage properties after acquisition, may acquire properties subject to
mortgages and may enter into joint ventures or other arrangements that require
mortgage financing. Prime Property Fund's borrowings may have recourse to
wholly-owned properties or may be secured by the general credit of the Fund and
thus have recourse to the entire Fund. During the period from 1989 through 1998
Prime Property Fund's total borrowings secured by wholly-owned properties
ranged from 10.4% to 26.6% of the Fund's total portfolio value. For more
information regarding borrowings secured by wholly-owned properties see "Prime
Property Fund Investments" in the SAI.
Prime Property Fund does not borrow in order to meet investors' withdrawal
requests.
<PAGE>
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LIQUID ASSETS
The Real Estate Fund seeks to hold enough liquid assets to provide for expected
withdrawals, and seeks to hold a minimum of 5% of its assets in liquid assets.
The Real Estate Fund and the Prime Property Fund each may invest in:
o units of our Separate Account No. 2A;
o government obligations;
o short-term commercial paper; and
o other money market instruments of the types described above.
These holdings could tend to reduce the investment performance of the Real
Estate Fund as compared to the Prime Property Fund or a fund fully invested in
real estate.
INVESTMENT RISKS RELATED TO PRIME PROPERTY FUND
Prime Property Fund is subject to the risks generally associated with the
ownership of real property, some of which we describe below. These risks could
cause the value of Prime Property Fund's real estate and other investments -
and, therefore, the value of the its units - to fluctuate.
The risks associated with investing in real property include:
o the uncertainty of cash flow;
o the need to meet fixed and other obligations;
o shifts in property values in real estate markets in general and in
local markets in particular;
o adverse changes in economic and social conditions, including
demographic trends;
o changes in operating expenses, including real estate taxes;
o changes in tax, zoning, building, environmental and other laws;
o losses due to nonpayment of rent;
o uninsured losses; and
o other risks beyond our control.
We believe that the large number of properties held in Prime Property Fund and
their geographic and use diversification provide a measure of protection
against these risks.
Investments in developmental properties are subject to additional risks, which
include cost overruns, construction delays, difficulties in finding suitable
tenants and delays in fully renting the property. Joint ventures may be
vulnerable to losses as a result of a joint venturer's financial difficulties.
In addition, the joint venturer may at times have objectives that are contrary
to those of Prime Property Fund. Construction loans may be vulnerable to losses
due to a developer's financial difficulties. In general, construction loans
will not be personal obligations of the borrower, and Prime Property Fund will
look solely to the underlying property in case of default. Other liens such as
mechanics' liens may have priority over Prime Propery Fund's security interest
in the property.
<PAGE>
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SPECIAL RISKS RELATED TO THE REAL
ESTATE FUND
LIQUIDITY
There is no assurance that the Real Estate Fund will have sufficient liquidity
to make distributions and transfers when requested under the Program or when
required by law. From 1991 to June 1994 the Real Estate Fund used
substantially all of its available cash flow and liquid assets to pay
participant withdrawal requests, and withdrawal requests were being delayed in
accordance with our procedures. We currently are delaying withdrawals from the
Prime Property Fund. Nevertheless, the Real Estate Fund has sufficient
liquidity and is paying participant withdrawals on a current basis.
Further, we may restrict or delay the Real Estate Fund's withdrawals from
Prime Property Fund, if we reasonably believe it necessary to protect the
interests of other participants in Prime Property Fund. We have restricted
withdrawals from Prime Property Fund from time to time.
The procedures we use for any delayed distributions or transfers from the Real
Estate Fund are described under "Procedures for Withdrawals, Distributions and
Transfers-Special Rules for Distributions and Transfers from the Real Estate
Fund" in the SAI.
-----------------------------------------------------------------------------
You may redeem Real Estate Fund units once each quarter. Payments to you may
be delayed.
-----------------------------------------------------------------------------
You should also understand that you may only redeem your Real Estate Fund
units after the end of a calendar quarter. We process redemption requests
after we know the value of Prime Property Fund for the last day of that
quarter and have determined the value of Real Estate Fund units. This
determination normally occurs five to ten days into the succeeding month. If
you are taking a distribution or transfer from the Real Estate Fund, the
amount distributed will not reflect any change in the net value of Prime
Property Fund assets attributable to the period between the last day of the
quarter and the day your redemption occurs. Please see "Special Rules for
Distributions and Transfers from the Real Estate Fund" under "Procedures for
withdrawals, Distributions and Transfers" in the SAI.
Because an investment in the Real Estate Fund involves substantial risk and
could deny you immediate access to your investment, you may wish to limit your
investment in the Real Estate Fund, particularly as you near retirement.
INSURANCE RISKS
We believe that our all-risk (property) casualty insurance would provide
adequate compensation for accidental loss of property value, including losses
in California resulting from earthquakes. Our insurance against earthquake
loss in California is limited to: (1) $310 million per occurrence and (2) $310
million aggregate annually for all our California properties, including Prime
Property Fund properties. We believe that the amount of earthquake insurance
we carry is reasonable in light of the types of coverage available at
acceptable prices and based on probable maximum loss analysis. Prime Property
Fund's properties are also covered under a commercial general liability and
umbrella policy that we believe is adequate for the portfolio in view of the
types of coverage currently available at acceptable prices.
CONFLICTS OF INTEREST
Lend Lease makes property acquisitions for us, our clients, and for itself and
its clients. Before acquisition, properties are allocated among Prime Property
Fund, our other separate accounts (both pooled and single-client accounts),
our general account, Lend Lease's own account, and Lend Lease 's advisory
accounts. Two or more of those accounts may share some of those properties.
Prime Property Fund does not share any properties with any of our other
accounts. We also may have interests in properties held in our general account
or in other accounts we manage that may be affected by the acquisition,
operations or sale of Prime Property Fund properties. One or more of these
situations could give rise to conflicts of interest among Prime Property Fund
and these other accounts, including our accounts.
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Lend Lease seeks to allocate properties among the accounts based on the
accounts' investment policies, size, liquidity and diversification
requirements, current availability of funds, current portfolio holdings and
annually established investment goals. Lend Lease's recommendations as to the
allocation of properties are reviewed and approved by the Allocation Committee
of the Lend Lease Board of Directors. With limited exceptions, the Allocation
Committee has final authority over the allocation of investment properties for
all of our accounts.
Certain related parties of Lend Lease manage some of the properties held in
Prime Property Fund pursuant to an exemption issued by the U.S. Department of
Labor. Lend Lease charges market level fees, including a profit, for the
services provided. During 1998, related parties of Lend Lease were paid $10.5
million for property management services.
Further, the value of the Real Estate Fund's investments depends heavily on
the estimated market values of properties held by Prime Property Fund. See
"How We Value Your Account." We base those estimates on our periodic
reappraisals of the properties. Our fees will tend to increase as those
appraised values increase. There is no assurance that any of the properties
will ultimately be sold for their appraised values.
Finally, Lend Lease also may postpone withdrawals from Prime Property Fund
under certain circumstances within our discretion. These circumstances include
a reasonable determination by us not to sell properties. Lend Lease's fees
depend on the aggregate value of net assets held in Prime Property Fund.
THE GUARANTEED OPTIONS
You can choose from among three different guaranteed options:
o two GRAs guaranteed by major insurance companies, or
o our Money Market Guarantee Account held in one of our separate accounts and
guaranteed by us.
Your investment in a guaranteed option is not regulated by the Securities and
Exchange Commission, and the following discussion about the guaranteed options
has not been reviewed by the staff of the SEC. The discussion, however, is
subject to certain generally applicable provisions of the federal securities
laws relating to the accuracy and completeness of the statements made.
GUARANTEED RATE ACCOUNTS
You can choose from a GRA that matures in three years (3-year GRA) or a GRA
that matures in five years (5-year GRA). Your contributions to the GRAs earn
the guaranteed interest rate then in effect when your contribution is
credited. The interest rate is expressed as an effective annual rate,
reflecting daily compounding and the deduction of applicable asset-based fees.
See "Charges and Expenses."
You can make new contributions or transfer amounts from other investment
options to a GRA at the current guaranteed rate at any time. New guaranteed
rates are offered each Wednesday and are available for a seven-day period. You
may call the AIM System to obtain the current GRA rates. You earn interest
from the day after your contribution or transfer is credited through the
maturity date of the GRA. See "Maturing GRAs" in the SAI for more information.
The amount of your contribution and interest that is guaranteed is subject to
any penalties applicable upon premature withdrawal. See "Premature Withdrawals
and Transfers from a GRA" in the SAI.
RESTRICTIONS ON WITHDRAWALS AND TRANSFERS
As a general matter, prior to a GRA's maturity you may not:
o remove amounts from a GRA;
o make transfers from one GRA to another investment option; or
o use GRA amounts to obtain a plan loan, for hardship or in-service
withdrawals, to receive benefits from a terminated plan or to transfer
amounts to a new plan.
Withdrawals from a GRA may be made before maturity if you are disabled, you
attain age 701|M/2, or you die. Certain
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other withdrawals from a GRA prior to maturity are permitted, but may be
subject to a penalty. See "Premature Withdrawals and Transfers" from a GRA in
the SAI.
THE GRA GUARANTEES
John Hancock Mutual Life Insurance Company ("John Hancock") guarantees all
contributions allocated to GRA's after July 31, 1998. These contributions are
invested until maturity through two group annuity contracts that John Hancock
Mutual issued to the ADA Trustees. John Hancock is a Massachusetts mutual life
insurance company with home offices at John Hancock Place, Boston,
Massachusetts 02117. Founded in 1862, John Hancock had assets of approximately
$41.9 billion in its general account as of December 31, 1998. John Hancock and
its subsidiaries had assets under management as of December 31, 1998 of
approximately $126.7 billion.
The ADA Trustees may arrange for other carriers to provide GRAs at any time.
All references in this prospectus and the SAI to the Guaranteed Rate Accounts"
or to a "GRA" or "GRAs" shall be deemed to refer to the GRAs provided by John
Hancock or any other carrier which previously provided or may in the future
provide Program GRAs, as appropriate. All GRAs invested in prior to July 31,
1998, remain invested through maturity with the insurance company that
provided that GRA.
Withdrawals, transfers, reallocations on maturity and benefit distributions
from GRAs provided by other carriers are subject to Equitable Life's receipt
of the proceeds of such GRA from the other carriers.
MONEY MARKET GUARANTEE ACCOUNT
All contributions to the Money Market Guarantee Account earn the same rate of
interest. The rate changes monthly and is expressed as an effective annual
rate, reflecting daily compounding and the deduction of applicable asset-based
fees. Contributions may be made at any time and will earn the current rate
from the day after the contribution is credited through the end of the month
or, if earlier, the day of transfer or withdrawal. Your balance in the Money
Market Guarantee Account at the end of the month automatically begins
receiving interest at the new rate until transferred or withdrawn. You may
call the AIM System to obtain the current monthly rate.
DISTRIBUTIONS, WITHDRAWALS, AND TRANSFERS
You may effect distributions, withdrawals and transfers, without penalty, at
any time permitted under your plan. We do not impose penalties on
distributions, withdrawals or transfers.
THE MONEY MARKET GUARANTEE ACCOUNT GUARANTEE
We guarantee the amount of your contributions to the Money Market Guarantee
Account and the interest credited. We hold assets in our Separate Account No.
43 sufficient to pay all principal and accrued interest under the Money Market
Guarantee Account option, less applicable fees, as required by law. Assets we
hold in Separate Account No. 43 attributable to ADA participants are available
to Program participants who have allocated amounts to the Money Market
Guarantee Account. We may not use these amounts to satisfy obligations that
may arise out of any other business we conduct. If the assets in Separate
Account No. 43 are insufficient to provide for payment of all principal and
accrued interest under the Money Market Guarantee Account, we will transfer
additional assets into Separate Account No. 43 to make up for any shortfall.
We may remove assets from Separate Account No. 43 that are in excess of those
attributable to the combined account values of all ADA participants.
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CALCULATION OF OUR RATES
The interest rate we credit to the Money Market Guarantee
Account approximates:
(1) the average over each calendar year of "domestic prime" money market funds
(funds with the highest quality investments); plus
(2) an amount which approximates the average expenses deducted from such
funds; less
(3) 0.15% (Administration Fee) and the applicable Program Expense Charge. See
"Charges and Expenses."
On January 1 each year we set an annual minimum interest rate for the Money
Market Guarantee Account. The minimum guaranteed interest rate for 1999 is
2.5% (before applicable asset-based fees).
<PAGE>
3 How we value your account balance in the Investment Funds
22
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FOR AMOUNTS IN THE EQUITY FUNDS
When you invest in an Equity Fund, your contribution or transfer purchases
"units" of that Fund. The unit value on any day reflects the value of the
Fund's investments for the day and the charges and expenses we deduct from the
Fund. We calculate the number of units you purchase by dividing the amount you
invest by the unit value of the Fund as of the close of business on the day we
receive your contribution or transfer instruction.
On any given day, your account value in any Equity Fund equals the number of
the Fund's units credited to your account, multiplied by that day's value for
one Fund unit. In order to take deductions from any Equity Fund, we cancel
units having a value equal to the amount we need to deduct. Otherwise, the
number of your Fund units of any Equity Fund does not change unless you make
additional contributions, make a withdrawal, effect a transfer, or request
some other transaction that involves moving assets into or out of that Fund
option.
For a description of how Equity Fund unit values are computed, see "How We
Compute Unit Values for the Funds" in the SAI.
FOR AMOUNTS IN THE REAL ESTATE FUND
The day on which the Real Estate Fund unit value is determined depends each
month on the day on which the value of Prime Property Fund is known. Prime
Property Fund is valued only once each month, as of the last business day of
the month. However, that value is normally not known until several days later
because financial data must be calculated and reported from properties located
throughout the country. When this process is completed, units of the Real
Estate Fund are valued. During the period between the end of the month and the
day on which the Real Estate fund units are valued, which normally ranges from
five to ten days, the value of Prime Property Fund real estate assets from the
end of the preceding month may change, income will accrue and expenses will be
incurred.
The Real Estate Fund accepts contributions and transfers only one day each
month. When you invest in the Real Estate Fund, your contribution or transfer
is first placed in the Money Market Guarantee Account. On the next day that
the Real Estate Fund accepts contributions, your contribution or transfer,
plus accrued interest, is used to purchase units in the Real Estate Fund. We
calculate the number of units you purchase by dividing the amount you invest
by the unit value of the Real Estate Fund. Note that the net value of Prime
Property Fund's investments as of the end of the preceding month may increase
or decrease before your purchase of Real Estate Fund units takes place. As a
result, the procedure described above will tend to favor Real Estate Fund
units being purchased to the extent that there have been net increases in the
value of the underlying net assets between the end of the month and the date
of the valuation. It will have the opposite effect to the extent of any
decreases in the net assets during this period.
You may change your mind about investing in the Real Estate Fund, but only if
you advise us in writing before a transfer is made to the Real Estate Fund.
You should tell us that the money being held in the Money Market Guarantee
Account is no longer designated for investment in the Real Estate Fund. You
also should enclose a transfer form telling us where that money is to be
allocated. We must receive your instructions by the close of business on the
day the transfer is to occur. Because the transfer date varies from month to
month, we cannot ensure that your instructions will be effective unless we
receive them by the first day of the month.
For a description of how Real Estate Fund unit values are computed, see "How
We Determine Unit Values for the Funds" in the SAI.
<PAGE>
4 Transfers and access to your account
23
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TRANSFERS AMONG INVESTMENT OPTIONS
You may transfer some or all of your amounts among the investment options if
you participate in the Master Plan. Participants in other plans may make
transfers as allowed by the plan.
No transfers from the GRAs to other investment options are permitted prior to
maturity. Transfers to the GRAs, and to or from the Money Market Guarantee
Account and the Growth Equity Fund, are permitted at any time. Transfers from
the Aggressive Equity Fund, ADA Foreign Fund, Equity Index Fund, Equity Income
Fund and Lifecycle Funds are permitted at any time except if there is any
delay in redemptions from the Underlying Mutual Fund or, with respect to the
Lifecycle Funds, the Lifecycle Fund Group Trusts in which they invest.
Transfers to and from the Real Estate Fund are subject to special rules, which
are described in detail under "Procedures for Withdrawals, Distributions and
Transfers - Special Rules for Distributions and Transfers from the Real Estate
Fund" in the SAI and referred to under "The Program."
OUR ACCOUNT INVESTMENT MANAGEMENT SYSTEM (AIM)
Participants may use our automated AIM System to transfer between investment
options, obtain account information, change the allocation of future
contributions and maturing GRAs and hear investment performance information.
To use the AIM System, you must have a touch-tone telephone. We assign a
personal security code ("PSC") number to you after we receive your completed
enrollment form.
We have established procedures to reasonably confirm the genuineness of
instructions communicated to us by telephone when using the AIM System. The
procedures require personal identification information, including your PSC
number, prior to acting on telephone instructions, and providing written
confirmation of the transfers. Thus, we will not be liable for following
telephone instructions we reasonably believe to be genuine.
A transfer request will be effective on the business day we receive the
request. We will confirm all transfers in writing.
-----------------------------------------------------------------------------
A business day is any day on which both the New York Stock Exchange and we are
open, and generally ends at 4:00 p.m. Eastern Time. We may, however, close due
to emergency conditions.
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PARTICIPANT LOANS
Participants loans are available if the employer plan permits them.
Participants must apply for a plan loan through the employer. Loan packages
containing all necessary forms, along with an explanation of how interest
rates are set, are available from our Account Executives.
Loans are subject to restrictions under Federal tax laws and ERISA. If you are
a sole proprietor, 10% or more partner, or a shareholder-employee of an S
Corporation who owns more than 5% of the shares (or a family member of any of
the above as defined under Federal income tax laws), you presently may not
borrow from your vested account balance without first obtaining a prohibited
transaction exemption from the Department of Labor. Participants should
consult with their attorneys or tax advisors regarding the advisability and
procedures for obtaining such an exemption. A loan may not be taken from the
Real Estate Fund, or from the Guaranteed Rate Accounts prior to maturity. If a
participant is married, written spousal consent will be required for a loan.
Generally, the loan amount will be transferred from the investment options
into a loan account. The participant must pay the interest as required by
Federal income tax rules. If you fail to repay the loan when due, the amount
of the unpaid balance may be taxable and subject to additional penalty taxes.
Interest paid on a retirement plan loan is not deductible.
<PAGE>
24
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CHOOSING BENEFIT PAYMENT OPTIONS
Benefit payments are subject to plan provisions.
The Program offers a variety of benefit payment options. If you are a
participant in a self-directed or individually-designed plan, ask your
employer for details. Your plan may allow you a choice of one or more of the
following forms of distribution:
o Qualified Joint and Survivor Annuity
o Lump Sum Payment
o Installment Payments
o Life Annuity
o Life Annuity - Period Certain
o Joint and Survivor Annuity
o Joint and Survivor Annuity - Period Certain
o Cash Refund Annuity
All of these options can be either fixed or variable except for the Cash
Refund Annuity and the Qualified Joint and Survivor Annuity which are fixed
options only.
- -----------------------------------------------------------------------------
The amount of each payment in a fixed option remains the same. Variable option
payments change to reflect the investment performance of the Growth Equity
Fund.
-----------------------------------------------------------------------------
See "Types of Benefits" in the SAI for detailed information regarding each of
the benefit payout options, and "Procedures for Withdrawals, Distributions and
Transfers" in the SAI.
Fixed annuities are available from insurance companies selected by the
Trustees. Upon request, we will provide fixed annuity rate quotes available
from one or more such companies. Participants may instruct us to withdraw all
or part of their account balance and forward it to the annuity provider
selected. Once we have distributed that amount to the company selected, we
will have no further responsibility to the extent of the distribution.
We provide the variable annuity options. Payments under variable annuity
options reflect investment performance of the Growth Equity Fund.
The minimum amount that can be used to purchase any type of annuity is $5,000.
In most cases an annuity administrative charge of $350 will be deducted from
the amount used to purchase an annuity from Equitable Life. Annuities
purchased from other providers may also be subject to fees and charges.
SPOUSAL CONSENT
If a participant is married and has an account balance greater than $5,000,
Federal law generally requires payment of a Qualified Joint and Survivor
Annuity payable to the participant for life and then to the surviving spouse
for life, unless you and your spouse have properly waived that form of payment
in advance. Please see "Spousal Consent Requirements" under "Types of
Benefits" in the SAI.
BENEFITS PAYABLE AFTER THE DEATH OF A PARTICIPANT
If a participant dies before the entire benefit has been paid, the remaining
benefits will be paid to the participant's beneficiary. If a participant dies
before he or she is required to begin receiving benefits, the law generally
requires the entire benefit to be distributed no more than five years after
death. There are exceptions: (1) a beneficiary who is not the participant's
spouse may elect payments over his or her life or a fixed period which does
not exceed the beneficiary's life expectancy, provided payments begin within
one year of death, (2) if the benefit is payable to the spouse, the spouse may
elect to receive benefits over his or her life or a fixed period which does
not exceed his/her life expectancy beginning any time up to the date the
participant would have attained age 701/2 or, if later, one year after the
participant's death, or (3) the spouse may be able to roll over all or part of
the death benefit to a traditional individual retirement arrangement. If, at
death, a participant was already receiving benefits, the beneficiary can
continue to receive benefits based on the payment option selected by the
<PAGE>
25
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participant, subject to the Federal income tax minimum distribution rules. To
designate a beneficiary or to change an earlier designation, a participant
must have the employer send us a beneficiary designation form. In some cases,
the spouse must consent in writing to a designation of any non-spouse
beneficiary, as explained in "Spousal Consent Requirements" under "Types of
Benefits" in the SAI.
Under the Master Plan, on the day we receive proof of death, we automatically
transfer the participant's account balance in the Equity Funds to the Money
Market Guarantee Account unless the beneficiary gives us other written
instructions. The balance in the Real Estate Fund will be treated as a
Priority 1 distribution and will be scheduled for transfer to the Money Market
Guarantee Account following the last day of the next quarter. See "Special
Risks Related to the Real Estate Fund."
<PAGE>
5 The Program
26
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The American Dental Association Members Retirement Program consists of several
types of retirement plans and two retirement plan Trusts, the Master Trust and
the Pooled Trust. Each of the Trusts invests exclusively in the group annuity
contracts described in this prospectus. The Program is sponsored by the ADA,
and the Trustees under the Master and Pooled Trusts are the members of the
Council on Insurance of the ADA (the "Trustees"). The Program had 25,284
participants and $1.4 billion in assets at December 31, 1998.
This section explains the ADA Program in further detail. It is intended for
employers who wish to enroll in the Program, but contains information of
interest to participants as well. You should, of course, understand the
provisions of your plan and the Participation Agreement that define the scope
of the Program in more specific terms. References to "you" and "your" in this
section are to you in your capacity as an employer.
ELIGIBLE EMPLOYERS
You can adopt the Program if you or at least one of your partners or other
shareholders is a member of: (1) the ADA, (2) a constituent or component
society of the ADA, or (3) an ADA-affiliated organization. Participation by an
affiliated organization must first be approved by the ADA's Council on
Insurance. Certain Code limitations will apply to constituent or component
societies.
Our Retirement Program Specialists are available to answer your questions
about joining the Program. Please contact us by using the telephone number or
addresses listed under "How To Reach Us - Information on Joining the Program"
on the back cover of the prospectus.
SUMMARY OF PLAN CHOICES
You have a choice of three retirement plan arrangements under the Program. You
can:
o Choose the MASTER PLAN - which automatically gives you a full range of
services from Equitable Life. These include your choice of the Program
investment options, plan-level and participant-level recordkeeping,
benefit payments and tax withholding and reporting. Under the Master Plan
employers adopt our Master Trust and your only investment choices are from
the Investment Options.
-----------------------------------------------------------------------------
The Master Plan is a defined contribution master plan that can be adopted as a
profit sharing plan (including optional 401(k), SIMPLE 401(k) and safe harbor
401(k) features), a defined contribution pension plan, or both.
-----------------------------------------------------------------------------
o Choose the SELF-DIRECTED PROTOTYPE PLAN - which gives you added flexibility
in choosing investments. This is a defined contribution prototype plan
which can be used to combine the Program investment options with your own
individual investments such as stocks and bonds. With this plan you must
adopt our Pooled Trust and maintain a minimum balance of $25,000 at all
times.
You must arrange separately for plan level accounting and brokerage services.
We provide recordkeeping services only for plan assets held in the Pooled
Trust. You can use any plan recordkeeper or you can arrange through us to hire
Trust Consultants, Inc. at a special rate. You can also arrange through us
brokerage services from our affiliate, DLJ Direct, at special rates or use the
services of any other broker.
-----------------------------------------------------------------------------
The Pooled Trust is an investment vehicle used with individually designed
qualified retirement plans. It can be used for both defined contribution and
defined benefit plans. We provide recordkeeping services for plan assets held
in the Pooled Trust.
-----------------------------------------------------------------------------
o Maintain your own INDIVIDUALLY DESIGNED PLAN - and use our Pooled Trust for
investment options in the Program and your own individual investments. The
Pooled Trust is for investment only and can be used for both defined
benefit and defined contribution plans.
Choosing the right plan depends on your own set of circumstances. We recommend
that you review all plan, trust, participation and related agreements with
your legal and tax counsel.
<PAGE>
27
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GETTING STARTED
If you choose the Master Plan, you must complete a Participation Agreement. If
you have your own individually designed plan and wish to use the Pooled Trust
as an investment vehicle, the trustee of your plan must complete a
Participation Agreement.
If you choose the Self-Directed Prototype Plan, you must complete the
Prototype Plan adoption agreement as well as a Participation Agreement in
order to use the Pooled Trust.
As an employer, you are responsible for the administration of the plan you
choose. If you have a Self-Directed Prototype Plan, you are also responsible
for appointing a plan trustee. Please see "Your Responsibilities as Employer"
in the SAI.
HOW TO MAKE PROGRAM CONTRIBUTIONS
Contributions must be in the form of a check drawn on a bank in the U.S.
clearing through the Federal Reserve System, in U.S. dollars, and made payable
to The ADA Retirement Trust. All contribution checks should be sent to
Equitable Life at the address shown "For Contribution Checks Only" in the
"Information Once You Join the Program" section under "How to Reach Us" on the
back cover of this prospectus. Third party checks are not acceptable, except
for rollover contributions, tax-free exchanges or trustee checks that involve
no refund. All checks are subject to collection. We reserve the right to
reject a payment if it is received in an unacceptable form.
All contributions must be accompanied by a Contribution Remittance form which
designates the amount to be allocated to each participant by contribution
type. Contributions are normally credited on the business day that we receive
them, provided the remittance form is properly completed. Contributions are
only accepted from the employer. Employees may not send contributions directly
to the Program.
The Real Estate Fund will accept contributions and effect transfers only one
day a month. See "The Real Estate Fund."
There is no minimum amount which must be contributed for investment if you
adopt the Master Plan, or if you have your own individually designed plan that
uses the Pooled Trust. If you adopt our self-directed prototype plan, you
must, as indicated above, keep at least $25,000 in the Pooled Trust at all
times.
ALLOCATING PROGRAM CONTRIBUTIONS
Under the Master Plan participants make all of the investment decisions.
Investment decisions in the Self-Directed Prototype Plan and individually
designed plans are made either by the participant or by the plan trustees
depending on the terms of the plan.
Participants may allocate contributions among any number of Program investment
options. Allocation instructions can be changed at any time. IF WE DO NOT
RECEIVE ADEQUATE INSTRUCTIONS, WE WILL ALLOCATE YOUR CONTRIBUTIONS TO THE
MONEY MARKET GUARANTEE ACCOUNT UNTIL WE ARE PROPERLY INSTRUCTED OTHERWISE.
WHEN TRANSACTION REQUESTS ARE EFFECTIVE.
Contributions, as well as transfer
requests and allocation changes (not including GRA maturity allocation changes
discussed in the SAI), are effective on the business day they are received.
In-service distribution requests are also effective on the business day they
are received. Benefit payments are subject to plan provisions. Transaction
requests received after the end of a business day will be credited the next
business day. Processing of any transaction may be delayed if a properly
completed form is not received.
Trustee-to-trustee transfers of plan assets are effective the business day
after we receive all items we require, including check and mailing
instructions, and the new or amended plan opinion/IRS determination letter or
adequate proof of this letter.
<PAGE>
28
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DISTRIBUTIONS FROM THE INVESTMENT OPTIONS
Keep in mind two sets of rules when considering distributions or withdrawals
from the Program. The first are rules and procedures that apply to the
investment options, exclusive of the provisions of your plan. We discuss those
in this section. The second are rules specific to your plan. We discuss those
"Rules Applicable to Participant Distributions" below. Certain plan
distributions may be subject to Federal income tax, and penalty taxes. See
"Tax Information."
AMOUNTS IN THE EQUITY FUNDS AND MONEY MARKET GUARANTEE ACCOUNT. These are
generally available for distribution at any time, subject to the provisions of
your plan. However, there may be a delay for withdrawals from the Aggressive
Equity Fund, ADA Foreign Fund, Equity Index, Equity Income or the Lifecyle
Funds if there is any delay in redemptions from the related Underlying Mutual
Fund, or with respect to the Lifecycle Funds, from the Lifecycle Fund Group
Trusts in which they invest.
AMOUNTS IN THE GUARANTEED RATE ACCOUNTS. Withdrawals generally may not be
taken from GRAs prior to maturity. See "Guaranteed Rate Accounts."
Payments or withdrawals and application of proceeds to an annuity ordinarily
will be made promptly upon request in accordance with plan provisions.
However, we can defer payments, applications and withdrawals for any period
during which the New York Stock Exchange is closed for trading, sales of
securities are restricted or determination of the fair market value of assets
is not reasonably practicable because of an emergency.
DISTRIBUTION AND TRANSFERS FROM THE REAL ESTATE FUND. Under the Master Plan,
distributions from the Real Estate Fund are made only after the amount to be
withdrawn has been transferred to another investment option and a confirmation
of the transfer has been sent to the recipient. Participants in an
individually-designed plan or the Prototype Self-Directed Plan may receive a
distribution directly from the Real Estate Fund without first having it
transferred to another investment option. See "Procedures for Withdrawals,
Distributions and Transfers-Special Rules for Distributions and Transfers From
the Real Estate Fund" and "Tax Information" in the SAI.
<PAGE>
29
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All distributions and transfers from the Real Estate Fund are subject to a
minimum wait of one calendar quarter. Payments are scheduled to be made
shortly after the end of the calendar quarter following the quarter in which
we receive properly completed forms requesting the distribution or transfer,
but they may be delayed. Withdrawals from the Real Estate Fund must be made in
amounts of at least $1,000 or, if less, your balance in the Real Estate Fund.
The Real Estate Fund may not have enough liquid assets to pay all withdrawals
when requested. If liquid assets are insufficient to pay all requested
withdrawals, withdrawal requests are prioritized according to the nature of
the distribution. For an explanation of how our "Priority 1" and "Priority 2"
distribution procedures operate, please see "Special Rules for Distributions
and Transfers from the Real Estate Fund" under "Procedures for Withdrawals,
Distributions and Transfers" in the SAI. Also see "Special Risks Related to
the Real Estate Fund" in the prospectus.
IF YOUR PLAN IS AN EMPLOYER OR TRUSTEE-DIRECTED PLAN, YOU AS THE EMPLOYER ARE
RESPONSIBLE FOR ENSURING THAT THERE IS SUFFICIENT CASH AVAILABLE TO PAY
BENEFITS.
RULES APPLICABLE TO PARTICIPANT DISTRIBUTIONS
In addition to our own procedures, distribution and benefit payment options
under a tax qualified retirement plan are subject to complicated legal
requirements. A general explanation of the federal income tax treatment of
distributions and benefit payment options is provided in "Tax Information" in
this prospectus and the SAI. You should discuss your options with a qualified
financial advisor. Our Account Executives also can be of assistance.
In general, under the Master Plan or our Self-Directed Prototype Plan,
participants are eligible for benefits upon retirement, death or disability,
or upon termination of employment with a vested benefit. Participants in an
individually designed plan are eligible for retirement benefits depending on
the terms of their plan. See "Benefit Payment Options" under "Transfers and
Access to Your Money," and "Tax Information" for more details. For
participants who own more than 5% of the business, benefits must begin no
later than April 1 of the year after the participant reaches age 701|M/2. For
all other participants, distribution must begin by April 1 of the later of the
year after attaining age 701|M/2 or retirement from the employer sponsoring
the plan.
Under the Master Plan, self-employed persons may generally not receive a
distribution prior to age 591|M/2, and employees generally may not receive a
distribution prior to a separation from service.
<PAGE>
6 Performance information
30
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The investment performance of the Equity Funds and the Real Estate Fund
reflects changes in unit values experienced over time. No performance has been
provided for the Equity Income Fund since it will not become available until
on or about July 1, 1999. The unit value calculations for the Funds include
all earnings, including dividends and realized and unrealized capital gains.
Unlike the typical mutual fund, the Funds reinvest, rather than distribute,
their earnings.
The following tables show the annual percentage change in Fund unit values,
and the average annual percentage change in Fund unit values, for various
periods within the ten years ended December 31, 1998. You may compare the
performance results for each Fund with the data presented for certain
unmanaged market indices, or "benchmarks."
Performance data for the benchmarks do not reflect any deductions for
investment advisory, brokerage or other expenses of the type typically
associated with an actively managed investment fund. This overstates their
rates of return and limits the usefulness of the benchmarks in assessing the
performance of the Funds. The benchmark results have been adjusted to reflect
reinvestment of dividends and interest for greater comparability. The
benchmarks are:
o Standard and Poor's 500 Index ("S&P 500")-a weighted index of the securities
of 500 companies widely regarded by investors as representative of the
stock market.
o Russell 2000 Index ("Russell 2000")-a broadly diversified small
capitalization index of the approximately 2,000 smallest stocks within the
Russell 3000 Index. The Russell 3000 Index consists of the largest 3,000
publicly traded stocks of U.S. domiciled corporations and includes large,
medium and small capitalization stocks.
o Morgan Stanley Capital International EAFE Index ("EAFE")-an index of the
securities of over 1,000 companies traded on the markets of Europe,
Australia, New Zealand and the Far East.
o Lehman Government/Corporate Bond Index ("Lehman")-an index widely regarded
as representative of the bond market.
o Salomon Brothers 3-Month T-Bill Index ("Salomon 3 Mo. T-Bill")-an index of
direct obligations of the U.S. Treasury which are issued in maturities
between 31 and 90 days.
o Consumer Price Index (Urban Consumers-not seasonally adjusted) ("CPI")-an
index of inflation that can be used as a non-securities benchmark.
The annual percentage change in unit values represents the percentage increase
or decrease in unit values from the beginning of one year to the end of that
year. The average annual rates of return are time-weighted, assume an
investment at the beginning of each period, and include the reinvestment of
investment income.
Historical results are presented for the Funds for the periods during which
the Funds were available under the Program. Hypothetical results were
calculated for prior periods, as described in "How We Calculate Performance
Data." In the case of the Aggressive Equity Fund, hypothetical results are
shown for years before 1996, because the Program did not begin to invest in
the MFS Emerging Growth Fund until December 1, 1995. For the Equity Index
Fund, no results are presented for periods prior to 1993, as the SSgA S&P 500
Index Fund began operations during 1992. 1995 performance data for the
Lifecycle Funds is shown for the period when the Funds commenced operations on
May 1, 1995 through December 31, 1995.
THE PERFORMANCE SHOWN DOES NOT REFLECT ANY RECORD MAINTENANCE AND REPORT OR
ENROLLMENT FEES. NO PROVISIONS HAVE BEEN MADE FOR THE EFFECT OF TAXES ON
INCOME AND GAINS OR UPON DISTRIBUTIONS. PAST PERFORMANCE IS NOT AN INDICATION
OF FUTURE PERFORMANCE.
<PAGE>
31
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ANNUAL PERCENTAGE CHANGE IN FUND UNIT VALUES
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
LIFECYCLE LIFECYCLE
GROWTH AGGRESSIVE ADA EQUITY FUND- FUND-
EQUITY EQUITY* FOREIGN* INDEX* CONSERVATIVE MODERATE
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1998 -3.2% 23.6% -5.6% 27.2% 10.2 15.1%
1997 26.2 19.8 5.9 31.7 9.9 16.1
1996 17.0 13.8 16.8 21.3 4.3 10.6
1995 31.1 40.2 10.0 35.1 5.9 10.1
1994 -2.3 4.0 -0.6 0.7 - -
1993 18.7 23.4 33.4 6.4 - -
1992 0.6 10.8 -0.6 - - -
1991 51.1 86.4 17.3 - - -
1990 -11.9 -3.3 -3.8 - - -
1989 43.9 26.0 29.6 - - -
- --------------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------------
SALOMON
REAL S&P RUSSELL 3-MO.
ESTATE 500 2000 EAFE LEHMAN T-BILL CPI
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1998 16.1% 28.6% -2.5% 20.0% 9.5% 5.1% 1.6%
1997 9.3 33.4 22.4 1.8 9.8 5.2 1.9
1996 0.2 23.0 16.5 6.1 2.9 5.3 3.3
1995 4.4 37.5 28.4 11.2 19.2 5.7 2.9
1994 3.6 1.3 -1.8 7.8 -3.5 4.2 2.7
1993 -3.2 10.0 18.9 32.6 11.0 3.1 2.7
1992 -5.2 7.6 18.4 -12.2 7.6 3.6 2.9
1991 -8.7 30.5 46.1 12.5 16.1 5.8 3.0
1990 2.0 -3.1 -19.5 -23.2 8.3 7.9 6.2
1989 8.1 31.7 16.3 10.8 14.2 8.7 4.6
</TABLE>
AVERAGE ANNUAL PERCENTAGE CHANGE IN
FUND UNIT VALUES - YEARS ENDING
DECEMBER 31, 1998
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
LIFECYCLE LIFECYCLE
GROWTH AGGRESSIVE ADA EQUITY FUND- FUND- REAL
EQUITY EQUITY* FOREIGN* INDEX* CONSERVATIVE MODERATE ESTATE
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 Year -3.2% 23.6% -5.6% 27.2% 10.2% 15.1% 16.1%
3 Years 12.7 19.0 5.3 26.6 8.1 13.9 8.3
5 Years 12.9 19.7 5.0 22.4 N/A N/A 6.6
10 Years 15.4 22.5 9.5 N/A N/A N/A 2.4
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
SALOMON
S&P RUSSELL 3-MO.
500 2000 EAFE LEHMAN T-BILL CPI
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 Year 28.6% -2.6% 20.0% 9.5% 5.1% 1.6%
3 Years 28.2 11.6 9.0 7.3 5.2 2.2
5 Years 24.1 11.9 9.2 7.3 5.1 2.4
10 Years 19.2 12.9 2.9 9.3 5.5 3.1
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
* Hypothetical results, in bold, are based on underlying mutual fund
performance before the inception of the respective Funds.
<PAGE>
32
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HOW WE CALCULATE PERFORMANCE DATA
The Growth Equity Fund performance reflects actual investment experience and
the deduction of asset-based charges actually incurred by Separate Account No.
4 (Pooled) under the Program.
The Aggressive Equity Fund has invested in the Class A shares of MFS Emerging
Growth Fund since September 13, 1993, when those shares were first offered for
sale. Prior to that date, and from December 1, 1995, the Aggressive Equity
Fund invested in Class B shares of MFS Emerging Growth Fund. The Class B and
Class A shares are identical, except that the Class B shares have higher
class-related expenses than the Class A shares.
Until December 1, 1995, when it became Separate Account No. 200, the
Aggressive Equity Fund had been part of our Separate Account No. 3 (Pooled)
that has its own managed portfolio of securities. As the Class A and Class B
shares of MFS Emerging Growth Fund represent interests in the same pool of
investments, we have shown hypothetical results for the Aggressive Equity Fund
for all periods before December 1, 1995, based on the actual performance of
the Class B shares. The results shown are adjusted for the Program expense
charges and expenses incurred by the Aggressive Equity Fund when it was part
of Separate Account No. 3 (Pooled). Because the expenses of the Class B shares
are higher than the Class A shares, the performance shown for periods before
September 13, 1993 would have been higher if Class A shares were available.
The ADA Foreign Fund began operations as Separate Account No. 191 on March 2,
1992. Until May 1, 1996, it invested approximately 95% of its assets in Class
A (formerly Class I) shares of Templeton Foreign Fund and the balance in an
Equitable Life short-term investment account, Separate Account No. 2A. Since
May 1, 1996, the ADA Foreign Fund has been 100% invested in Class A shares of
Templeton Foreign Fund. The results shown in the tables for periods prior to
March 2, 1992, are hypothetical results and are based on the investment of
100% of the ADA Foreign Fund's assets in Templeton Foreign Fund, consistent
with the current investment policy of the Fund. On January 1, 1993, Templeton
Foreign Fund - Class A implemented a Rule 12b-1 plan, which affects subsequent
performance. For the hypothetical calculations we have applied the Program
expense charge during those periods plus .15% in estimated other expenses to
the historical experience of the Templeton Foreign Fund.
The Equity Index Fund began operations as Separate Account No. 195 on February
1, 1994. For prior periods hypothetical results are shown. The results reflect
the actual performance of SSgA S&P 500 Index Fund beginning with 1993, the
first full year after that mutual fund began operations. For these
hypothetical calculations we have applied the Program expense charge during
those periods plus .15% in estimated other expenses to the historical
investment experience of the SSgA S&P 500 Index Fund.
The Lifecycle Fund-Conservative and the Lifecycle Fund-Moderate performance
shown reflects actual investment performance of Separate Account No. 197 and
Separate Account No. 198 for the period beginning May 1, 1995, when the Funds
commenced operations.
The Real Estate Fund performance shown reflects actual investment experience
and the deduction of asset-based charges actually incurred by Separate Account
No. 30 (Pooled) under the Program during the periods indicated.
<PAGE>
7 Charges and expenses
33
- --------------------------------------------------------------------------------
You will incur two general types of charges under the Program:
(1) Charges based on the value of your assets in the Program - these apply to
all amounts invested in the Program (including installment payout option
payments), and do not vary by plan. These are, in general, reflected as
reductions in the unit values of the investment funds or as reductions
from the rates credited to the guaranteed options.
(2) Plan and transaction charges - these vary by plan or are charged for
specific transactions, and are typically stated in a dollar amount. Unless
otherwise noted, these are deducted in fixed dollar amounts by reducing
the number of units in the appropriate investment funds and the dollars in
the guaranteed options.
For the Real Estate Fund, we base the number of units deducted on the last
unit value determined prior to the date of deduction. We deduct amounts for
the 3-year or 5-year GRA from your most recent GRA.
We make no deduction from your contributions or withdrawals for sales
expenses.
CHARGES BASED ON AMOUNTS INVESTED IN THE PROGRAM
PROGRAM EXPENSE CHARGE
We assess the Program expense charge against the combined value of Program
assets in all the investment options. The purpose of this charge is to cover
the expenses that we and the ADA incur in connection with the Program.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
ANNUAL PROGRAM EXPENSE CHARGE*
--------------------------------------------
VALUE OF PROGRAM
ASSETS EQUITABLE LIFE ADA TOTAL
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
First $400 million .620% .025% .645%
Over $400 million .620 .020 .640
- -------------------------------------------------------------------------------
</TABLE>
* The Program expense charge is determined by negotiation between us and the
Trustees. The charge is primarily based on a formula that gives effect to
total Program assets and the number of plans enrolled in the Program.
Currently, the portion paid to the ADA has been reduced to 0.015% for all
asset levels, but the ADA's portion could be increased in the future. For
the 12 months beginning May 1, 1999, the total Program expense charge is
0.635%.
For investment options other than GRAs, the Program expense charge is
calculated based on Program assets on January 31 in each year, and is charged
at a monthly rate of 1|M/12 of the relevant annual charge.
For GRAs, the Program expense charge is calculated based on Program assets on
January 31 of each year, and is charged at a constant daily rate of 1/365 of
the relevant annual charge until maturity. Subsequent changes in the Program
expense charge will not be reflected in the charge against closed GRAs. In
addition to the Program expense charge, we charge an annual investment
accounting fee of 0.02% on all amounts of Program assets invested in GRAs
issued after February 1992. This fee is reflected in the interest rates
credited to the GRAs and is calculated and charged in the same manner as the
Program expense charge.
We apply our portion of the Program expense charge toward the cost of
maintenance of the investment options, promotion of the Program, commissions,
administrative costs, such as enrollment and answering participant inquiries,
and overhead expenses such as salaries, rent, postage, telephone, travel,
legal, actuarial and accounting costs, office equipment and stationery. The
ADA's part of this fee covers developmental and administrative expenses
incurred in connection with the Program. The ADA Trustees can direct us to
raise or lower the ADA's part of this fee to reflect their expenses in
connection with the Program. During 1998 we received $8,354,823 and the ADA
received $173,712 under the Program expense charge.
<PAGE>
34
- --------------------------------------------------------------------------------
INVESTMENT MANAGEMENT AND ADMINISTRATION FEES
The computation of unit values for each investment fund also reflects fees
charged for investment management and administration. These charges are based
on the amount of Program assets in the investment fund at the end of the
second month prior to the day on which the calculation is being made. The
monthly charges are 1/12 of the following amounts:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
TYPE OF FEE
- -------------------------------------------------------------------------------
VALUE OF
PROGRAM INVESTMENT
FUND FUND ASSETS MANAGEMENT ADMINISTRATION TOTAL
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Growth Equity Fund First $100 million .29% .15% .44%
Over $100 million .20 .15 .35
- -------------------------------------------------------------------------------
Aggressive Equity All amounts - .15(1) .15(1)
Fund
- -------------------------------------------------------------------------------
ADA Foreign Fund All amounts - .15(2) .15(2)
- -------------------------------------------------------------------------------
Equity Index Fund All amounts - .15 .15
- -------------------------------------------------------------------------------
Equity Income Fund All amounts - .15(3) .15(3)
- -------------------------------------------------------------------------------
Lifecycle Fund All amounts - .15 .15
-Conservative
- -------------------------------------------------------------------------------
Lifecycle Fund All amounts - .15 .15
-Moderate
- -------------------------------------------------------------------------------
Real Estate Fund First $50 million 1.10 .25 1.35
Next $25 million 1.00 .25 1.25
Over $75 million .95 .25 1.20
- -------------------------------------------------------------------------------
</TABLE>
(1) We currently waive the .15% administration fee that applies to the
Aggressive Equity Fund. MFS Funds Distributors, Inc., however, pays us
an annual amount of up to 0.25% of the average daily net assets of the
ADA Program invested in the MFS Emerging Growth Fund. We use this
payment to defray administrative expenses associated with the Program's
operations and to fund Program enhancements. The waiver and payment
agreement are expected to be in effect for an indefinite period, but
both are subject to termination by either party upon notice.
(2) We waive the .15% administration fee for the ADA Foreign Fund in view
of the payment we receive under the Templeton Foreign Fund Class A Rule
12b-1 Plan. The fee under the Rule 12b-1 Plan is at an annual rate not
to exceed .25% of the Templeton Foreign Fund's Class A assets. We use
this payment for administrative expenses associated with the Program's
operations and to fund Program enhancements. We also receive a
recordkeeping fee of up to $12, per participant, per year from
Templeton.
(3) We currently waive the .15% administration fee that applies to the
Equity Income Fund. Putnam Management, however, pays us an annual
amount of up to 0.25% of the average daily net assets of the ADA
Program invested in the Putnam Equity Income Fund. We use this payment
to defray administrative expenses associated with the Program's
operations and to fund Program enhancements. The waiver and payment
agreement are expected to be in effect for an indefinite period, but
both are subject to termination by either party upon notice.
As part of our administrative functions, we maintain records for all portfolio
transactions and cash flow control, calculate unit values, monitor compliance
with the New York Insurance Law and supervise custody matters for all the
Equity Funds.
The Real Estate Fund pays us a fee for managing that Fund and the underlying
Prime Property Fund. We impose no additional fees for our management of Prime
Property Fund. The services we provide to the Real Estate Fund include
monitoring the Real Estate Fund's holdings and liquidity. The services we
provide to Prime Property Fund include selecting real properties for purchase
and sale, managing some properties, selecting managers for other properties,
appraising the properties, accounting for receipts and disbursements for the
properties, and servicing any loans issued by Prime Property Fund. The
administration fee is to reimburse us for the additional expenses involved in
administering that Fund.
OTHER EXPENSES BORNE BY THE INVESTMENT FUNDS
Certain other expenses are charged directly to the investment funds. These
include SEC filing fees and certain related expenses such as printing of SEC
filings, prospectuses and reports, mailing costs, custodians' fees, financial
accounting costs, outside auditing and legal expenses, and other costs related
to the Program.
The Aggressive Equity, ADA Foreign, Equity Index and Equity Income Funds
purchase and redeem shares in the MFS Emerging Growth Fund, Templeton Foreign
Fund - Class A, SSgA S&P 500 Index Fund and Putnam Equity Income Fund, at net
asset value. The net asset value reflects charges for management, audit,
legal, shareholder services, transfer agent and custodian fees. For a
description of charges and expenses assessed by the MFS Emerging Growth Fund,
<PAGE>
35
- --------------------------------------------------------------------------------
Templeton Foreign Fund, SSgA S&P 500 Index Fund and Putnam Equity Income Fund,
which are indirectly borne by the Funds, please refer to the prospectuses for
each of these Underlying Mutual Funds.
The Lifecycle Funds-Conservative and Moderate purchase and redeem units in the
Lifecycle Fund Group Trusts-Conservative and Moderate, respectively, at net
asset value. The net asset value reflects charges for investment management,
audit, legal, custodian and other fees. By agreement with the ADA Trustees, we
impose a charge at the annual rate of .03% of the value of the respective
assets of the Lifecycle Funds-Conservative and Moderate. This charge
compensates us for additional legal, accounting and other potential expenses
resulting from the inclusion of the Lifecycle Fund Group Trusts and Underlying
State Street Funds among the investment options described in this prospectus.
For a description of charges and expenses assessed by the Lifecycle Fund Group
Trusts, which are indirectly borne by the Lifecycle Funds, please refer to our
separate prospectus for the Lifecycle Funds.
PLAN AND TRANSACTION EXPENSES
ADA RETIREMENT PLAN, PROTOTYPE SELF-DIRECTED PLAN AND INDIVIDUALLY-DESIGNED
PLAN FEES
RECORD MAINTENANCE AND REPORT FEE. At the end of each calendar quarter, we
deduct a record maintenance and report fee from each participant's Account
Balance. This fee is:
<TABLE>
- -------------------------------------------------------------------------------
<S> <C>
ADA Members Retirement Plan participants $3 per quarter
Self-Directed Prototype Plan participants $3 per quarter
Investment Only $1 per quarter
- -------------------------------------------------------------------------------
</TABLE>
ENROLLMENT FEE. We charge an employer a non-refundable enrollment fee of $25
for each participant enrolled under its plan. If we do not maintain individual
participant records under an individually-designed plan, we instead charge the
employer $25 for each plan or trust. If the employer fails to pay these
charges, we may deduct the amount from subsequent contributions or from
participants' account balances.
PROTOTYPE SELF-DIRECTED PLAN FEES. Employers who participate in our Prototype
Self-Directed Plan incur additional fees not payable to us, such as brokerage
and administration fees.
INDIVIDUAL ANNUITY CHARGES
ANNUITY ADMINISTRATIVE CHARGE. If a participant elects a variable annuity
payment option, we deduct a $350 charge from the amount used to purchase the
annuity. This charge reimburses us for administrative expenses associated with
processing the application for the annuity and issuing each month's annuity
payment. The minimum amount that can be converted to an annuity, so that the
charge would apply, is $5,000. Annuities purchased from other providers may
also be subject to fees and charges.
CHARGE FOR APPLICABLE TAXES. In certain jurisdictions, amounts used to
purchase an annuity are subject to charges for premium or other applicable
taxes (rates currently range up to 2%). Taxes depend, among other things, on
your place of residence, applicable laws and the form of annuity benefit you
select. We will deduct such charges based on your place of residence at the
time the annuity payments begin.
GENERAL INFORMATION ON FEES AND CHARGES
We may change our investment management fees if we give the ADA Trustees 90
days notice and comply with the conditions of our group annuity contract. We
may change the other fees and charges described above at any time with the
ADA's consent. During 1998 we received total fees and charges under the
Program of $11,844,736.
<PAGE>
8 Tax information
36
- --------------------------------------------------------------------------------
In this section, we briefly outline current federal income tax rules relating
to adoption of the Program, contributions to the Program and distributions to
participants under qualified retirement plans. Certain other information about
qualified retirement plans appears here and in the SAI. We do not discuss the
effect, if any, of state tax laws that may apply.
The United States Congress has in the past considered and may in the future
consider proposals for legislation that, if enacted, could change the tax
treatment of qualified retirement plans. In addition, the Treasury Department
may amend existing regulations, issue new regulations, or adopt new
interpretations of existing laws. State tax laws or, if you are not a United
States resident, foreign tax laws, may affect the tax consequences to you or
the beneficiary. These laws may change from time to time without notice and,
as a result, the tax consequences may also change. There is no way of
predicting whether, when or in what form any such change would be adopted.
Any such change could have retroactive effects regardless of the date of
enactment. We suggest you consult your legal or tax adviser.
Because you are buying a contract to fund a retirement plan that already
provides tax deferral under Federal income tax rules, you should do so for the
contract's features and benefits other than tax deferral. The tax deferral of
the contract does not provide additional benefits.
INCOME TAXATION OF DISTRIBUTIONS TO QUALIFIED PLAN PARTICIPANTS
In this section, the word "you" refers to the plan participant.
Amounts distributed to a participant from a qualified plan are generally
subject to federal income tax as ordinary income when benefits are distributed
to you or your beneficiary. Generally speaking, only your post-tax
contributions, if any, are not taxed when distributed.
LUMP SUM DISTRIBUTIONS. If we distribute your benefits to you in a lump sum
after you have participated in the plan for at least five taxable years, you
may be able to use five-year averaging. Under this method, you calculate the
tax on the lump sum distribution separately from taxes on any other income you
may have during the year. You calculate the tax at ordinary income tax rates
in the year of the distribution, but as if it were your only income in each of
five years. The tax payable is the sum of the five years' calculations. To
qualify for five-year averaging, the distribution must consist of your entire
balance in the plan and must occur in one taxable year after you have attained
age 591|M/2. Five-year averaging is available only for one lump sum
distribution.
If you were born before 1936, you may elect to have special rules apply to one
lump sum distribution. You may elect either ten-year averaging using 1986
rates or five-year averaging using then current rates. In addition, you may
elect separately to have the portion of your distribution attributable to
pre-1974 contributions taxed at a flat 20% rate.
Effective January 1, 2000, you may no longer use five year averaging on lump
sum distributions.
ELIGIBLE ROLLOVER DISTRIBUTIONS. Many types of distributions from qualified
plans are "eligible rollover distributions" that can be transferred directly
to another qualified plan or traditional individual retirement arrangement
("IRA"), or rolled over to another plan or IRA within 60 days of the receipt
of the distribution. If a distribution is an "eligible rollover distribution,"
20% mandatory Federal income tax withholding will apply unless the
distribution is directly transferred to a qualified plan or IRA. See "Eligible
Rollover Distributions and Federal Income Tax Withholding" in the SAI for a
more detailed discussion.
ANNUITY OR INSTALLMENT PAYMENTS. Each payment you receive is ordinary income
for tax purposes, except where you have a "cost basis" in the benefit. Your
cost basis is equal to the amount of your post-tax employee contributions,
plus any employer contributions you had to include in gross income in prior
years. You may exclude from gross income a portion of each annuity or
installment payment you receive. If you (and your survivor) continue to
receive payments after you have received your cost basis in the contract, all
amounts will be taxable.
<PAGE>
37
- --------------------------------------------------------------------------------
IN-SERVICE WITHDRAWALS. Some plans allow in-service withdrawals of after-tax
contributions. The portion of each withdrawal attributable to cost basis is
not taxable. The portion of each withdrawal attributable to earnings is
taxable. Withdrawals are taxable only after they exceed your cost basis if
they are attributable to your pre-January 1, 1987 contributions under plans
that permitted those withdrawals as of May 5, 1986. Amounts that you include
in gross income under this rule may also be subject to the additional 10%
penalty tax on premature distributions described below. In addition, 20%
mandatory Federal income tax withholding may also apply.
PREMATURE DISTRIBUTIONS. You may be liable for an additional 10% penalty tax
on all taxable amounts distributed before age 591|M/2 unless the distribution
falls within a specified exception or is rolled over into an IRA or other
qualified plan.
The exceptions to the penalty tax include (a) distributions made on account of
your death or disability, (b) distributions beginning after separation from
service in the form of a life annuity or installments over your life
expectancy (or the joint lives or life expectancies of you and your
beneficiary), (c) distributions due to separation from active service after
age 55 and (d) distributions you use to pay deductible medical expenses.
WITHHOLDING. In almost all cases, 20% mandatory income tax withholding will
apply to all "eligible rollover distributions" that are not directly
transferred to a qualified plan or IRA. If a distribution is not an eligible
rollover distribution, the recipient may elect out of withholding. The rate of
withholding depends on the type of distribution. See "Eligible Rollover
Distributions and Federal Income Tax Withholding" in the SAI. Under the ADA
Master Retirement Plan, we will withhold the tax and send you the remaining
amount. Under an individually designed plan or our prototype self-directed
plan we will pay the full amount of the distribution to the plan's trustee.
The trustee is then responsible for withholding Federal income tax upon
distributions to you or your beneficiary.
OTHER TAX CONSEQUENCES
Federal estate and gift taxes, state and local estate and inheritance taxes,
and other tax consequences of participation in the Program, depend on the
residence and the circumstances of each participant or beneficiary. For
complete information on Federal, state, local and other tax considerations,
you should consult a qualified tax advisor.
<PAGE>
9 More information
38
- --------------------------------------------------------------------------------
ABOUT PROGRAM CHANGES OR TERMINATIONS
AMENDMENTS. The group annuity contract has been amended in the past and we and
the Trustees may agree to amendments in the future. No future change can
affect annuity benefits in the course of payment. If certain conditions are
met, we may: (1) terminate the offer of any of the investment options and (2)
offer new investment options with different terms.
TERMINATION. We or the ADA Trustees may terminate the group annuity contract.
If the contract is terminated, we will not accept any further contributions or
perform any recordkeeping functions after the date of termination. We then
would make arrangements with the ADA Trustees with respect to the assets held
in the investment options that we provide, subject to the following:
o transfers and withdrawals from the Real Estate Fund would continue to be
subject to the restrictions described in this prospectus and in the SAI;
o the ADA Trustees could transfer assets from the Money Market Guarantee
Account in installments over a period of time not to exceed two years;
however, during that time participants would be permitted to make
transfers to funding vehicles provided by another financial institution
(other than a money market fund or similar investment); and
o amounts allocated to the GRAs would be held until maturity.
If the ADA Trustees make arrangements with us, you may be able to continue to
invest amounts in the investment options that we provide and elect payment of
benefits through us.
IRS DISQUALIFICATION
If your plan is found not to qualify under the Internal Revenue Code, we may:
(1) return the plan's assets to the employer (in our capacity as the plan
administrator) or (2) prevent plan participants from investing in the separate
accounts.
ABOUT THE SEPARATE ACCOUNTS
Each investment fund is one of our separate accounts. We established the
separate accounts under special provisions of the New York Insurance Law.
These provisions prevent creditors from any other business we conduct from
reaching the assets we hold in our investment funds for owners of our variable
annuity contracts, including our group annuity contracts with the ADA
Trustees. The results of each separate account's operations are accounted for
without regard to Equitable Life's, or any other separate account's, operating
results. We are the legal owner of all of the assets in the separate accounts
and may withdraw any amounts we have in the separate accounts that exceed our
reserves and other liabilities under variable annuity contracts.
The separate accounts that we call the Growth Equity, Aggressive Equity, ADA
Foreign, Equity Index, Lifecycle and Real Estate Funds commenced operations on
1968, 1995, 1992, 1994, 1995, and 1986 respectively. The Aggressive Equity
Fund, which was part of our Separate Account No. 3 (Pooled), was transferred
on December 1, 1995 to Separate Account No. 200. The separate account we call
the Equity Income Fund is expected to commence operations on or about July 1,
1999. Because of exclusionary provisions, none of the investment funds is
subject to regulation under the Investment Company Act of 1940.
The Aggressive Equity, ADA Foreign, Equity Index , Equity Income and Lifecycle
Funds are used exclusively in the ADA Program. The Growth Equity and Real
Estate Funds each are "pooled" funds that are used to fund benefits under the
ADA Program and other group annuity contracts, agreements, and tax-deferred
retirement programs we administer.
<PAGE>
39
- --------------------------------------------------------------------------------
ABOUT OUR YEAR 2000 PROGRESS
Equitable Life relies upon various computer systems in order to administer
your policy and operate the investment options. Some of these systems belong
to service providers who are not affiliated with Equitable Life.
In 1995, Equitable Life began addressing the question of whether its computer
systems would recognize the Year 2000 before, on or after January 1, 2000, and
Equitable Life has identified those of its systems critical to business
operations that were not Year 2000 compliant. By year end 1998, the work of
modifying or replacing non-compliant systems was substantially completed.
Equitable Life has begun comprehensive testing of its Year 2000 compliance and
expects that the testing will be substantially completed by June 30, 1999.
Equitable Life has contacted third-party service providers to seek
confirmations that they are acting to address the Year 2000 issue with the
goal of avoiding any material adverse effect on services provided to
policyowners and on operations of the investment options. Most third-party
service providers have provided Equitable Life confirmations of their Year
2000 compliance. Equitable Life believes it is on schedule for substantially
all such systems and services, including those considered to be
mission-critical, to be confirmed as Year 2000 compliant, renovated, replaced
or the subject of contingency plans, by June 30, 1999, except for one
investment accounting system which is scheduled to be replaced by August 31,
1999 and confirmed as Year 2000 compliant by September 30, 1999. Additionally,
Equitable Life will be supplementing its existing business continuity and
disaster recovery plans to cover certain categories of contingencies that
could arise as a result of Year 2000 related failures. Year 2000 specific
contingency plans are anticipated to be in place by June 30, 1999.
There are many risks associated with Year 2000 issues, including the risk that
Equitable Life's computer systems will not operate as intended. Additionally,
there can be no assurance that the systems of third parties will be Year 2000
compliant. Any significant unresolved difficulty related to the Year 2000
compliance initiatives could result in an interruption in, or a failure of,
normal business operations and, accordingly, could have a material adverse
effect on our ability to administer your policy and operate the investment
options.
To the fullest extent permitted by law, the foregoing Year 2000 discussion is
a "Year 2000 Readiness Disclosure" within the meaning of The Year 2000
Information and Readiness Disclosure Act, 15 U.S.C. Sec. 1 (1998).
ABOUT LEGAL PROCEEDINGS
Equitable Life and its affiliates are parties to various legal proceedings. In
our view, none of these proceedings is likely to have a material adverse
effect upon the separate accounts, our ability to meet our obligations under
the Program, or the distribution of group annuity contract interests under the
Program.
<PAGE>
40
- --------------------------------------------------------------------------------
ABOUT OUR INDEPENDENT ACCOUNTANTS
The following financial statements included in the SAI as well as the
following condensed financial information included in the prospectus have been
so included in reliance on the report of PricewaterhouseCoopers LLP given on
the authority of said firm as experts in auditing and accounting:
o The financial statements for Separate Account Nos. 4, 191, 200 and 30 as
of December 31, 1998 and for each of the two years in the period then
ended.
o The financial statements for Separate Account No. 8 as of December 31,
1998 and 1997 and for each of the two years in the period ended December
31, 1998.
o The financial statements for Equitable Life as of December 31, 1998 and
1997 and for each of the three years in the period ended December 31,
1998.
o The condensed financial information for Separate Account Nos. 4, 191, and
30 for each of the six years in the period ended December 31, 1998.
o The condensed financial information for Separate Account Nos. 195 for each
of the five years in the period ended December 31, 1998.
o The condensed financial information for Separate Account Nos. 197, 198 and
200 for each of the four years in the period ended December 31, 1998.
REPORTS WE PROVIDE AND AVAILABLE INFORMATION
We send reports annually to employers showing the aggregate Account Balances
of all participants and information necessary to complete annual IRS filings.
As permitted by the SEC's rules, we omitted certain portions of the
registration statement filed with the SEC from this prospectus and the SAI.
You may obtain the omitted information by: (1) requesting a copy of the
registration statement from the SEC's principal office in Washington, D.C.,
and paying prescribed fees, or (2) by accessing the EDGAR Database at the
SEC's web site at http://www.sec.gov.
ACCEPTANCE
The employer or plan sponsor, as the case may be: (1) is solely responsible
for determining whether the Program is a suitable funding vehicle and (2)
should carefully read the prospectus and other materials before entering into
a Participation Agreement.
<PAGE>
Appendix I: Condensed financial information
A-1
- --------------------------------------------------------------------------------
These selected per unit data and ratios for the years ended December 31, 1993
through December 31, 1998 have been audited by PricewaterhouseCoopers LLP,
independent accountants, as stated in their reports included in the SAI. For
years prior to 1993, the condensed financial information was audited by other
independent accountants. The financial statements of each of the Funds as well
as the consolidated financial statements of Equitable Life are contained in the
SAI. The report for the Real Estate Fund includes an explanatory paragraph
relating to the appraised valuation of real estate investments. Information is
provided for the period that each Fund has been available under the Program,
but not longer than ten years.
GROWTH EQUITY FUND: SEPARATE ACCOUNT NO. 4 (POOLED)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
INCOME AND EXPENSES
--------------------------------------------
NET INVESTMENT
EXPENSES INCOME
YEAR ENDED DEC. 31, INCOME (NOTE A) (LOSS)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
1998 $ 1.84 (3.64) (1.80)
1997 $ 1.77 (3.38) (1.61)
1996 $ 1.56 (2.87) (1.31)
1995 $ 2.10 (2.28) ( .18)
1994 $ 2.03 (2.03) .00
1993* $ 1.97 (1.92) .05
1992 $ 1.69 (1.75) ( .06)
1991 $ 1.50 (1.52) ( .02)
1990 $ 2.13 (1.16) .97
1989 $ 1.88 (1.09) .79
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
CAPITAL CHANGES OPERATING STATISTICS
----------------------------------------------------------------------------------------------------------------
NET
REALIZED
AND RATIO OF NET NUMBER OF
UNREALIZED NET NET ASSET NET ASSET RATIO OF INVESTMENT UNITS
GAINS INCREASE VALUE AT VALUE AT OPERATING INCOME OUTSTANDING
YEAR (LOSSES) ON (DECREASE) BEGINNING END OF EXPENSES TO (LOSS) TO AT END OF PORTFOLIO
ENDED INVESTMENTS IN UNIT OF PERIOD PERIOD AVERAGE NET AVERAGE NET PERIOD TURNOVER
DEC. 31, (NOTE B) VALUE (NOTE C) (NOTE D) ASSETS ASSETS (IN 000'S) RATE
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1998 (9.63) (11.43) 354.61 $ 343.18 1.05% (.52)% 1,296 71%
1997 75.28 73.67 280.94 $ 354.61 1.07% (.51)% 1,386 62%
1996 42.22 40.91 240.03 $ 280.94 1.10% (.50)% 1,435 105%
1995 57.14 56.96 183.07 $ 240.03 1.07% (.08)% 1,456 108%
1994 (4.23) (4.23) 187.30 $ 183.07 1.11% .00% 1,441 91%
1993* 29.46 29.51 157.79 $ 187.30 1.14% .03% 1,431 82%
1992 .92 .86 156.93 $ 157.79 1.17% (.04)% 1,418 68%
1991 53.07 53.05 103.88 $ 156.93 1.16% (.02)% 1,350 66%
1990 (14.99) (14.02) 117.90 $ 103.88 1.10% .92 % 1,295 93%
1989 35.17 35.96 81.94 $ 117.90 1.07% .78% 1,399 113%
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Prior to July 22, 1993, Equitable Life Capital Management Corporation
("Equitable Life Capital") served as the investment adviser to the Fund.
On July 22, 1993, Alliance Capital Management L.P. acquired the business
and substantially all of the assets of Equitable Life Capital and became
the investment adviser to the Fund.
NOTES: See next page.
<PAGE>
A-2
- --------------------------------------------------------------------------------
A. Enrollment, annual administration and actuarial and quarterly record
maintenance and report fees are not included above and did not affect any
unit values. Defined benefit plan annual administration and actuarial and
quarterly record maintenance and report fees reduced the number of Fund
units credited to participants; enrollment fees were generally deducted
from contributions to the Program.
B. See Note 2 to Financial Statements of Separate Account No. 4 (Pooled),
which may be found in the SAI.
C. The Program became available beginning on January 1, 1968. The value for a
Growth Equity Fund unit was established at $10.00 on that date.
D. Income, expenses, gains and losses shown above pertain only to ADA
participants' accumulations attributable to the Program. Other plans also
participate in the Growth Equity Fund and may have operating results and
other supplementary data different from those shown above.
AGGRESSIVE EQUITY FUND, ADA FOREIGN FUND, EQUITY INDEX FUND, LIFECYCLE FUND -
CONSERATIVE AND LIFECYCLE FUND - MODERATE:
SEPARATE ACCOUNT NOS. 200, 191, 195, 197 AND 198
Unit values and number of units outstanding for these Funds, since inception,
are shown below.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
FOR THE YEARS ENDING DECEMBER 31,
---------------------------------------------------------------------------------
1992 1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C> <C>
Aggressive Equity Fund
Unit Value - - - $ 42.62 $ 48.48 $ 58.07 $ 71.77
Number of units outstanding (000's) - - - 1,802 2,237 2,295 2,348
ADA Foreign Fund
Unit Value $ 9.81 $ 13.08 $ 13.01 $ 14.31 $ 16.71 $ 17.69 $ 16.70
Number of units outstanding (000's) 1,692 4,220 5,537 4,769 5,050 5,170 4,336
Equity Index Fund
Unit Value - - $ 9.71 $ 13.12 $ 15.91 $ 20.95 $ 26.65
Number of units outstanding (000's) - - 515 1,483 2,100 3,713 4,890
Lifecycle Fund-Conservative
Unit Value - - - $ 10.59 $ 11.04 $ 12.13 $ 13.37
Number of units outstanding (000's) - - - 281 409 596 1,009
Lifecycle Fund-Moderate
Unit Value - - - $ 11.01 $ 12.18 $ 14.14 $ 16.28
Number of units outstanding (000's) - - - 6,924 7,241 7,657 7,691
- --------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------------------
INCEPTION DATE
----------------
<S> <C>
Aggressive Equity Fund 12/1/95
Unit Value
Number of units outstanding (000's)
ADA Foreign Fund 3/2/92
Unit Value
Number of units outstanding (000's)
Equity Index Fund 2/1/94
Unit Value
Number of units outstanding (000's)
Lifecycle Fund-Conservative 5/1/95
Unit Value
Number of units outstanding (000's)
Lifecycle Fund-Moderate 5/1/95
Unit Value
Number of units outstanding (000's)
- -----------------------------------------------------------------------------
</TABLE>
REAL ESTATE FUND: SEPARATE ACCOUNT NO. 30 (POOLED)
<TABLE>
<CAPTION>
- -----------------------------------------------------
INCOME AND EXPENSES
--------------------------------------
NET
INVESTMENT
YEAR ENDED EXPENSES INCOME
DEC. 31, INCOME (NOTE A) (LOSS)
- -----------------------------------------------------
<S> <C> <C> <C>
1998 $ 0.07 (.30) (.23)
1997 $ 0.11 (.27) (.16)
1996 $ 0.09 (.25) (.16)
1995 $ 0.06 (.25) (.19)
1994 $ 0.04 (.24) (.20)
1993 $ 0.01 (.24) (.23)
1992 $ 0.01 (.25) (.24)
1991 $ 0.01 (.26) (.25)
1990 $ 0.02 (.27) (.25)
1989 $ 0.02 (.25) (.23)
- ------------------------------------------------------
</TABLE>
<PAGE>
A-3
- --------------------------------------------------------------------------------
REAL ESTATE FUND: Separate Account No. 30 (Pooled)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
CAPITAL CHANGES OPERATING STATISTICS
-------------------------------------- ------------------------------------
NET
REALIZED
AND RATIO OF NET NUMBER OF
UNREALIZED NET UNIT UNIT RATIO OF INVESTMENT UNITS
GAINS INCREASE VALUE AT VALUE AT OPERATING INCOME OR OUTSTANDING PORTFOLIO
YEAR (LOSSES) ON (DECREASE) BEGINNING END OF EXPENSES TO (LOSS) TO AT END OF TURNOVER
ENDED INVESTMENTS IN UNIT OF PERIOD PERIOD AVERAGE NET AVERAGE NET PERIOD RATE
DEC. 31, (NOTE B) VALUE (NOTE C) (NOTE F) ASSETS ASSETS (IN 000'S) (NOTE E)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1998 2.10 1.87 $ 12.67 $ 14.54 2.20% (1.66%) 358 N/A
1997 1.36 1.20 $ 11.47 $ 12.67 2.29% (1.38%) 318 N/A
1996 .95 .79 $ 10.68 $ 11.47 2.30% (1.48%) 349 N/A
1995 .02 .21 $ 10.89 $ 10.68 2.26% (1.67%) 371 N/A
1994 .65 .45 $ 10.44 $ 10.89 2.26% (1.87%) 311 N/A
1993 .22 ( .01) $ 10.45 $ 10.44 2.26% (2.20%) 408 N/A
1992 (.38) ( .62) $ 11.07 $ 10.45 2.30% (2.25%) 511 N/A
1991 (.84) (1.09) $ 12.16 $ 11.07 2.21% (2.10%) 515 N/A
1990 .05 (0.20) $ 12.36 $ 12.16 2.14% (1.96%) 530 N/A
1989 1.08 0.85 $ 11.51 $ 12.36 2.11% (Note D) (1.93%) (Note D) 584 N/A
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
A. Enrollment and quarterly record maintenance and report fees are not
included above and did not affect Real Estate Fund unit values. Quarterly
record maintenance and report fees reduced the number of Real Estate Fund
units credited to participants; enrollment fees were generally deducted
from contributions to the Program.
B. The change in the value of Prime Property Fund (Separate Account No. 8)
units owned by the Real Estate Fund and any realized gains (losses) from
the redemption of such units are included in net realized and unrealized
gain on investments. See Note 2 to Financial Statements of Separate
Account No. 30 (Pooled), which may be found in the SAI.
C. The value for a Real Estate Fund unit was established at $10.00 on August
29, 1986, the date on which the Fund commenced operations.
D. Annualized basis.
E. The Real Estate Fund invests solely in units of Equitable Life's Separate
Account Nos. 8 and 2A; thus, there is no applicable portfolio turnover
rate for the Real Estate Fund.
F. The Real Estate Fund Unit Values shown above are based on the year-end
values for Separate Account Nos. 8 and 2A. However, the unit values used
under the Program for determining Fund balances, processing transactions
and calculating performance (including Fund balances, transactions and
performance effected or reported on December 31) are based on the last
Real Estate Fund unit value determined in each relevant period and,
therefore, such unit values reflect the values of Separate Account Nos. 8
and 2A as of dates prior to the last day of such periods.
Income, expenses, gains and losses shown above pertain only to ADA
participants' accumulations attributable to the Program. Other plans also
participate in Separate Account No. 30 (Pooled) and may have operating results
and other supplementary data different from those shown above.
<PAGE>
Statement of additional information
S-1
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Funding of the Program SAI-2
Your Responsibilities as Employer SAI-2
Procedures for Withdrawals, Distributions and
Transfers SAI-3
Types of Benefits SAI-7
Provisions of the Master Plan SAI-9
Prime Property Fund Investments SAI-13
Investment Restrictions Applicable to the Growth
Equity Fund SAI-17
How We Determine the Unit Value for the Funds SAI-17
How We Value the Assets of the Investment Funds SAI-18
Growth Equity Fund Transactions SAI-21
Prime Property Fund Transactions SAI-22
Investment Management Fee SAI-22
Underwriter SAI-22
Our Management SAI-23
Financial Statements SAI-25
</TABLE>
CLIP AND MAIL TO US TO RECEIVE A STATEMENT OF ADDITIONAL INFORMATION
To: The Equitable Life Assurance Society
of the United States
Box 2486 G.P.O. New York, NY 10116
Please send me a copy of the Statement of Additional Information for the
American Dental Association Members Retirement Program Prospectus dated May 1,
1999.
-----------------------------------------------------------------------------
Name:
-----------------------------------------------------------------------------
Address:
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
Copyright 1999 by The Equitable Life Assurance Society of the United States.
All rights reserved.
<PAGE>
Investment option characteristics
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
GROWTH EQUITY AGGRESSIVE EQUITY
FUND FUND
- -------------------------------------------------------------------------------------------
<S> <C> <C>
Long term growth of Long term growth of
DESIGNED FOR (OBJECTIVE) capital capital
- -------------------------------------------------------------------------------------------
INVESTS PRIMARILY IN Common stocks and Invests 100% of its
other equity-type assets in the MFS
securities generally Emerging Growth Fund
issued by large and which invests in
intermediate-sized common stocks of
companies emerging growth
companies
- -------------------------------------------------------------------------------------------
RISK TO PRINCIPAL Average for a growth Somewhat higher than a
fund growth fund
- -------------------------------------------------------------------------------------------
PRIMARY GROWTH Capital appreciation and Capital appreciation and
POTENTIAL THROUGH reinvested dividends reinvested dividends
- -------------------------------------------------------------------------------------------
INCOME GUARANTEE No No
- -------------------------------------------------------------------------------------------
VOLATILITY OF RETURN Somewhat more volatile Highly volatile
than the S&P 500
- -------------------------------------------------------------------------------------------
TRANSFERS TO OTHER Permitted daily Permitted daily
OPTIONS
- -------------------------------------------------------------------------------------------
WITHDRAWAL No No
PENALTIES
- -------------------------------------------------------------------------------------------
[GRAPHIC OMITTED] [GRAPHIC OMITTED]
- -------------------------------------------------------------------------------------------
<CAPTION>
- -------------------------------------------------------------------------------------------
ADA FOREIGN FUND EQUITY INDEX FUND
- -------------------------------------------------------------------------------------------
<S> <C> <C>
Long term growth of Replicate the total
DESIGNED FOR (OBJECTIVE) capital return of the S&P 500
Index
- -------------------------------------------------------------------------------------------
INVESTS PRIMARILY IN Invests 100% of its Invests 100% of its
assets in the Templeton assets in the SSgA S&P
Foreign Fund - Class A 500 Index Fund which
which invests primarily invests in all 500 stocks
in stocks of companies in the S&P 500 Index in
outside the U.S., proportion to their
including emerging weighting in the Index
markets
- -------------------------------------------------------------------------------------------
RISK TO PRINCIPAL Somewhat higher than a Somewhat lower than
growth fund the Growth Equity Fund
- -------------------------------------------------------------------------------------------
PRIMARY GROWTH Capital appreciation and Capital appreciation and
POTENTIAL THROUGH reinvested dividends reinvested dividends
- -------------------------------------------------------------------------------------------
INCOME GUARANTEE No No
- -------------------------------------------------------------------------------------------
VOLATILITY OF RETURN Generally depends on Generally equal to the
stock, country and S&P 500 Index
currency selections, as
well as market factors
- -------------------------------------------------------------------------------------------
TRANSFERS TO OTHER Permitted daily Permitted daily
OPTIONS
- -------------------------------------------------------------------------------------------
WITHDRAWAL No No
PENALTIES
- -------------------------------------------------------------------------------------------
[GRAPHIC OMITTED] [GRAPHIC OMITTED]
- -------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
EQUITY INCOME LIFECYCLE FUND- LIFECYCLE FUND-
FUND CONSERVATIVE MODERATE
- --------------------------------------------------------------------------------
<S> <C> <C>
Growth and income Current income and low Growth of capital and
to moderate growth of reasonable level of
capital current income
- --------------------------------------------------------------------------------
Invests 100% of its Invests 100% of its Invests 100% of its
assets in the Putnam assets in a mix of assets in a mix of
Equity Income Fund underlying collective underlying collective
which invests mostly in investment funds investment funds
income producing maintained by State maintained by State
equities, and may invest Street Street
in debt securities for
additional income
- --------------------------------------------------------------------------------
Somewhat lower than Somewhat lower than Somewhat lower than a
Equity Funds the Lifecycle growth fund
Fund-Moderate
- --------------------------------------------------------------------------------
Reinvested dividends, Capital appreciation and Capital appreciation,
capital growth reinvested dividends and reinvested dividends
interest
- --------------------------------------------------------------------------------
No No No
- --------------------------------------------------------------------------------
Somewhat lower than Generally lower than Generally lower than
the Equity Funds pure equity funds, but pure equity funds, but
degree may vary degree may vary
depending on market depending on market
conditions conditions
- --------------------------------------------------------------------------------
Permitted daily Permitted daily Permitted daily
- --------------------------------------------------------------------------------
No No No
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED] [GRAPHIC OMITTED] [GRAPHIC OMITTED]
- --------------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------------
MONEY MARKET
GUARANTEED GUARANTEE
REAL ESTATE FUND RATE ACCOUNTS ACCOUNT
- --------------------------------------------------------------------------------
<S> <C> <C>
Stable rate of return Principal and interest Principal and interest
through rental income guaranteed- guaranteed-
and appreciation interest rates reflect short term rates
maturities
- --------------------------------------------------------------------------------
High-grade, Contributions credited Contributions credited
income-producing real with fixed rate of with current guaranteed
property interest until the rate of interest
maturity date
- --------------------------------------------------------------------------------
Lower than the Equity Carrier providing GRAs Equitable Life
Funds guarantees principal and guarantees principal and
interest interest; also backed by
assets in insulated
separate account
- --------------------------------------------------------------------------------
Rental income, capital Interest income Interest income
appreciation and
interest
- --------------------------------------------------------------------------------
No Yes-subject to Yes
withdrawal penalties
- --------------------------------------------------------------------------------
Stable and less volatile Carrier providing GRAs Equitable Life
than the Equity Funds guarantees interest rate guarantees monthly
until the maturity date interest rate; also
backed by assets in
insulated separate
account
- --------------------------------------------------------------------------------
Permitted quarterly if Permitted only at Permitted daily
cash available maturity
- --------------------------------------------------------------------------------
No Prior to maturity, No
withdrawals may not be
permitted or may be
subject to a penalty
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED] [GRAPHIC OMITTED] [GRAPHIC OMITTED]
- --------------------------------------------------------------------------------
</TABLE>
The investment options each have different investment objectives and policies
that affect returns and the market and financial risks involved. The investment
funds involve a greater potential for growth but involve risks that are not
present with the guaranteed options. There is no assurance that any of the
investment objectives will be achieved or that the risk to principal or
volatility of return will be as indicated.
<PAGE>
About Equitable Life
- --------------------------------------------------------------------------------
The Equitable Life Assurance Society of the United States ("Equitable Life")
is the issuer of a group annuity contract that funds the Program. Equitable
Life also makes forms of plans and trusts available, and offers recordkeeping
and participant services to facilitate the operation of the Program.
Equitable Life is a New York stock life insurance corporation and has been
doing business since 1859. We are a wholly-owned subsidiary of The Equitable
Life Companies, Inc., whose majority shareholder is AXA, a French insurance
holding company. As a majority shareholder, and under its other arrangements
with Equitable Life and Equitable Life's parent, AXA exercises significant
influence over the operations and capital structure of Equitable Life and its
parent. Neither AXA nor Equitable Life's related companies, however, have any
legal responsibility to pay amounts that Equitable Life owes under its group
annuity contract that funds the ADA Program. During 1999, The Equitable Life
Companies Incorporated plans to change its name to AXA Financial, Inc.
Equitable Life manages over $347.5 billion in assets as of December 31, 1998.
For more than 100 years we have been among the largest insurance companies in
the United States. We are licensed to sell life insurance and annuities in all
fifty states, the District of Columbia, Puerto Rico, and the U.S. Virgin
Islands. Our home office is located at 1290 Avenue of the Americas, New York,
NY 10104.
<PAGE>
- --------------------------------------------------------------------------------
HOW TO REACH US
You can reach us as indicated below to obtain:
o Copies of any plans, trusts, participation agreements, or enrollment or
other forms used in the Program.
o Unit values and other values under your plan,
o Any other information or materials that we provide in connection with the
Program.
INFORMATION ON JOINING THE PROGRAM
- ------------------------------------
BY PHONE:
- ------------------------------------
1-800-523-1125
(Retirement program specialists
available weekdays 9am to 5pm
Eastern Time)
- ------------------------------------
BY REGULAR MAIL:
- ------------------------------------
The ADA Members Retirement Program
c/o Equitable Life, Box 2011
Secaucus, NJ 07096
- ------------------------------------
BY REGISTERED, CERTIFIED,
OR OVERNIGHT DELIVERY:
- ------------------------------------
The ADA Members Retirement Program
c/o Equitable Life
200 Plaza Drive, Second Floor
Secaucus, NJ 07094
- ------------------------------------
No person is authorized by The Equitable Life Assurance Society of the
United States to give any information or make any representations other
than those contained in this prospectus and the SAI, or in other printed or
written materials issued by Equitable Life. You should not rely on any other
information or representation.
INFORMATION ONCE YOU JOIN THE PROGRAM
- ------------------------------------
BY PHONE
- ------------------------------------
1-800-223-5790
(Account Executives available weekdays 9am to 5pm
Eastern Time)
- ------------------------------------
TOLL-FREE AIM SYSTEM
- ------------------------------------
By calling 1-800-223-5790 you may, with your assigned
personal security code, use our Automated Investment
Management ("AIM") System to:
o Transfer between investment options and obtain account
information.
o Change the allocation of future contributions and
maturing guaranteed options
o Hear investment performance information, including
investment fund unit values and current guaranteed
option interest rates.
The AIM System operates 24 hours a day. You may speak
with our Account Executives during regular business
hours about any matters covered by AIM System changes
in premium allocation percentages.
- ------------------------------------
BY REGULAR MAIL
- ------------------------------------
(correspondence): The ADA Members
Retirement Program
Box 2486 G.P.O.
New York, NY 10116
- ------------------------------------
FOR CONTRIBUTION CHECKS ONLY
- ------------------------------------
The Association Members
Retirement Program
P.O. Box 1599
Newark, NJ 07101-9764
- ------------------------------------
FOR REGISTERED, CERTIFIED, OR OVERNIGHT
DELIVERY
- ------------------------------------
The ADA Members Retirement Program
c/o Equitable Life
200 Plaza Drive, 2B-55
Secaucus, NJ 07094 materials issued by Equitable Life. You
should not rely on any other information or representation.
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
MAY 1, 1999
AMERICAN DENTAL ASSOCIATION
MEMBERS RETIREMENT PROGRAM
Funded primarily through a group annuity contract with THE EQUITABLE LIFE
ASSURANCE SOCIETY OF THE UNITED STATES, 1290 Avenue of the Americas, New York,
New York 10104. Toll-free telephone number 1-800-223-5790.
- --------------------------------------------------------------------------------
This Statement of Additional Information ("SAI") is not a prospectus. You
should read this SAI in conjunction with Equitable Life's prospectus dated May
1, 1999 for the American Dental Association Members Retirement Program. THIS
SAI RELATES TO ALL INVESTMENT OPTIONS EXCEPT THE EQUITY INDEX FUND AND
LIFECYCLE FUNDS, WHICH ARE DISCUSSED IN OUR SEPARATE SAI FOR THOSE INVESTMENT
OPTIONS.
A copy of the prospectus to which this SAI relates is available at no charge by
writing to Equitable Life at Box 2486 G.P.O., New York, New York 10116 or by
calling our toll-free telephone number. Definitions of special terms used in
this SAI are found in the prospectus.
Certain of the cross references in this SAI are contained in the prospectus
dated May 1, 1999 to which this SAI relates.
CONTENTS OF THIS SAI
<TABLE>
<CAPTION>
PAGE IN SAI
------------
<S> <C>
Funding of the Program ............................. SAI-2
Your Responsibilities as Employer .................. SAI-2
Procedures for Withdrawals, Distributions and
Transfers ..................................... SAI-3
Pre-Retirement Withdrawals ....................... SAI-3
Benefit Distributions ............................ SAI-4
Eligible Rollover Distributions and Federal
Income Tax Withholding ...................... SAI-4
Premature Withdrawals and Transfers from a
GRA ......................................... SAI-4
Maturing GRAs .................................... SAI-6
Special Rules for Distributions and Transfers
from the Real Estate Fund ................... SAI-6
Real Estate Fund Withdrawals from Prime
Property Fund ............................... SAI-7
Types of Benefits .................................. SAI-7
Provisions of the Master Plan ...................... SAI-9
Plan Eligibility Requirements .................... SAI-9
Contributions to Qualified Plans ................. SAI-10
Contributions to the Master Plan ................. SAI-10
Allocation of Contributions ...................... SAI-12
</TABLE>
<TABLE>
<CAPTION>
PAGE IN SAI
------------
<S> <C>
The Master Plan and Section 404(c) of ERISA SAI-12
Vesting .......................................... SAI-13
Prime Property Fund Investments .................... SAI-13
Holdings of Prime Property Fund .................... SAI-15
Investment Restrictions Applicable to the Growth
Equity Fund ................................. SAI-17
How We Determine Unit Values for the Funds ......... SAI-17
The Equity Funds ................................. SAI-17
The Real Estate Fund ............................. SAI-18
How We Value the Assets of the Investment
Funds ....................................... SAI-18
The Growth Equity Fund ........................... SAI-18
Other Equity Funds ............................... SAI-19
Assets Held in Prime Property Fund ............... SAI-20
Growth Equity Fund Transactions .................... SAI-21
Prime Property Fund Transactions ................... SAI-22
Investment Management Fee .......................... SAI-22
Underwriter ........................................ SAI-22
Our Management ..................................... SAI-23
Financial Statements ............................... SAI-25
</TABLE>
- ----------
Copyright 1999 by The Equitable Life Assurance Society of The United States.
All rights reserved.
<PAGE>
- --------------------------------------------------------------------------------
FUNDING OF THE PROGRAM
The Program is primarily funded through a group annuity contract issued to the
ADA Trustees by Equitable Life. The ADA Trustees have also entered into two
group annuity contracts with John Hancock Mutual Life Insurance Company
relating to Guaranteed Rate Accounts opened during the one year period
beginning July 31, 1998. All other investment options are covered by the
contract with Equitable Life. The ADA Trustees hold all contracts for the
benefit of employers and participants in the Program.
The ADA Trustees and Equitable Life also have an administrative services
agreement for administrative support, recordkeeping and marketing services
provided by Equitable Life. This agreement would normally terminate when the
group annuity contract with Equitable Life terminates.
YOUR RESPONSIBILITIES AS EMPLOYER
If you adopt the Master Plan, you as the employer and plan administrator will
have certain responsibilities, including:
o sending us your contributions at the proper time and in the proper
format;
o maintaining all personnel records necessary for administering your plan;
o determining who is eligible to receive benefits;
o forwarding to us all the forms your employees are required to submit;
o distributing summary plan descriptions and participant annual reports to
your employees and former employees;
o distributing our prospectuses and confirmation notices to your employees
and, in some cases, former employees;
o filing an annual information return for your plan with the Internal
Revenue Service, if required;
o providing us the information with which to run special non-discrimination
tests, if you have a 401(k) plan or your plan accepts post-tax employee
or employer matching contributions;
o determining the amount of all contributions for each participant in the
plan;
o forwarding salary deferral and post-tax employee contributions to us;
o selecting interest rates and monitoring default procedures if you elect
the loan provision in your plan; and
o providing us with written instructions for allocating amounts in the
plan's forfeiture account.
If you, as an employer, have an individually designed plan, your
responsibilities will not be increased in any way by adopting the Pooled Trust
for investment only. If you adopt our self-directed prototype plan, you will be
completely responsible for administering the plan and complying with all of the
reporting and disclosure requirements applicable to qualified plans, with the
assistance of the recordkeeper of your choice.
We can provide guidance and assistance in the performance of your
responsibilities. If you have questions about any of your obligations, you can
contact our Account Executives at 1-800-223-5790 or write to us at Box 2486
G.P.O., New York, New York 10116.
SAI-2
<PAGE>
- --------------------------------------------------------------------------------
PROCEDURES FOR WITHDRAWALS, DISTRIBUTIONS AND TRANSFERS
PRE-RETIREMENT WITHDRAWALS. Under the Master Plan, self-employed persons
generally may not receive a distribution prior to age 59 1/2, and employees
generally may not receive a distribution prior to separation from service.
However, if the Master Plan is maintained as a profit sharing plan, you may
request distribution of benefits after you reach age 59 1/2 even if you are
still working. If the Master Plan is maintained as a 401(k) plan and you are
under age 59 1/2, you may withdraw your own 401(k) contributions only if you can
demonstrate financial hardship within the meaning of applicable income tax
regulations. Each withdrawal must be at least $1,000 (or, if less, your entire
account balance or the amount of your hardship withdrawal under a 401(k) plan).
If your employer terminates the plan, all amounts (subject to GRA restrictions)
may be distributed to participants at that time.
You may withdraw all or part of your account balance under the Master Plan
attributable to post-tax employee contributions at any time, subject to any
withdrawal restrictions applicable to the Investment Options, provided that you
withdraw at least $300 at a time (or, if less, your account balance
attributable to post-tax employee contributions). See "Tax Information" in the
prospectus.
We pay all benefit payments (including withdrawals due to plan terminations) in
accordance with the rules described below in the "Benefit Distributions"
discussion. We effect all other participant withdrawals as of the close of the
business day we receive the properly completed form.
Under the self-directed prototype plan you may receive a distribution upon
attaining normal retirement age as specified in the plan, or upon separation
from service. If your employer maintains the self-directed prototype plan as a
profit sharing plan, an earlier distribution of funds that have accumulated
after two years is available if you incur a financial hardship, as defined in
the plan.
In addition, if you are married, your spouse may have to consent in writing
before you can make any type of withdrawal, except for the purchase of a
Qualified Joint and Survivor Annuity. See "Spousal Consent Requirement" below.
Under an individually designed plan, the availability of pre-retirement
withdrawals depends on the terms of the plan. We suggest that you ask your
employer what types of withdrawals are available under your plan.
Transfers and withdrawals from the Aggressive Equity Fund, the ADA Foreign
Fund, the Equity Index Fund and the Equity Income Fund may be deferred if there
is any delay in redemption of shares of the respective mutual funds in which
the Funds invest. We generally do not expect any delays.
Transfers and withdrawals from the Lifecycle Funds--Conservative and Moderate
may be deferred if there is any delay in redemption of units of the Lifecycle
Fund Group Trusts. We generally do not expect any such delays.
Special rules apply to withdrawals from the Real Estate Fund. See "Special
Rules for Distributions and Transfers from the Real Estate Fund" below.
PLEASE NOTE THAT GENERALLY YOU MAY NOT MAKE WITHDRAWALS FROM THE GUARANTEED
RATE ACCOUNTS PRIOR TO MATURITY, EVEN IF THE EMPLOYER PLAN PERMITS WITHDRAWALS
PRIOR TO THAT TIME. SEE "PREMATURE WITHDRAWALS AND TRANSFERS FROM A GRA" BELOW.
TRANSFERS FROM THE ADA FOREIGN FUND, EQUITY INDEX FUND, AGGRESSIVE EQUITY FUND,
EQUITY INCOME FUND AND LIFECYCLE FUNDS--CONSERVATIVE AND MODERATE ARE PERMITTED
DAILY EXCEPT UNDER INFREQUENT CIRCUMSTANCES WHEN THE WITHDRAWALS MAY BE SUBJECT
TO A DELAY. SEE "BENEFIT DISTRIBUTIONS" BELOW. IN ADDITION, THE REAL ESTATE
FUND IS SUBJECT TO SPECIAL WITHDRAWAL RULES WHICH ARE DESCRIBED UNDER "SPECIAL
RULES FOR DISTRIBUTIONS AND TRANSFERS FROM THE REAL ESTATE FUND" BELOW.
SAI-3
<PAGE>
- --------------------------------------------------------------------------------
BENEFIT DISTRIBUTIONS. In order for you to begin receiving benefits under the
Master Plan, your employer must send us your properly completed Election of
Benefits form and, if applicable, Beneficiary Designation form. Your benefits
will commence according to the provisions of your plan.
Under an individually designed plan and our self-directed prototype plan, your
employer must send us a Request for Disbursement Form. We will send single sum
payments to your plan's trustee as of the close of business on the day we
receive a properly completed form. If you wish to receive annuity payments,
your plan's trustee may purchase a variable annuity contract from us. Fixed
annuities are available from insurance companies selected by the Trustees. See
"Types of Benefits." We will pay annuity payments directly to you and payments
will commence according to the provisions of your plan.
Please note that we use the value of your vested benefits at the close of the
business day payment is due to determine the amount of benefits you receive. We
will not, therefore, begin processing your check until the following business
day. You should expect your check to be mailed within five days after
processing begins. Annuity checks can take longer. If you buy a fixed annuity,
your check will come from the insurance company you selected. If you are
withdrawing more than $50,000 and you would like expedited delivery at your
expense, you may request it on your Election of Benefits form.
If a participant in the Master Plan dies without designating a beneficiary, the
vested benefit will automatically be paid to the spouse or, if the participant
is not married, to the first surviving class of his or her (a) children, (b)
parents and (c) brothers and sisters. If none of them survive, the
participant's vested benefit will be paid to the participant's estate. If a
participant in our prototype self-directed plan dies without designating a
beneficiary, the vested benefit will automatically be paid to the spouse or, if
the participant is not married, to the first surviving class of his or her (a)
children, (b) grandchildren, (c) parents, (d) brothers and sisters and (e)
nephews and nieces. If none of them survive, the participant's vested benefit
will be paid to the participant's estate.
ELIGIBLE ROLLOVER DISTRIBUTIONS AND FEDERAL INCOME TAX WITHHOLDING. All
"eligible rollover distributions" are subject to mandatory Federal income tax
withholding of 20% unless the participant elects to have the distribution
directly rolled over to a qualified plan or traditional individual retirement
arrangement (IRA). An "eligible rollover distribution" is generally any
distribution that is not one of a series of substantially equal periodic
payments made (not less frequently than annually): (1) for the life (or life
expectancy) of the plan participant or the joint lives (or joint life
expectancies) of the plan participant and his or her designated beneficiary, or
(2) for a specified period of 10 years or more. Hardship distributions are not
eligible rollover distributions. In addition, the following are not subject to
mandatory 20% withholding:
o certain corrective distributions under Code Section 401(k) plans;
o loans that are treated as distributions; and
o a distribution to a beneficiary other than to a surviving spouse or a
current or former spouse under a qualified domestic relations order.
If we make a distribution to a participant's surviving spouse, or to a current
or former spouse under a qualified domestic relations order, the distribution
may be an eligible rollover distribution, subject to mandatory 20% withholding,
unless one of the exceptions described above applies.
If a distribution is not an "eligible rollover distribution", we will withhold
income tax from all taxable payments unless the recipient elects not to have
income tax withheld.
PREMATURE WITHDRAWALS AND TRANSFERS FROM A GRA. You may transfer amounts from
other investment options to a GRA at any time. Transfers may not be made from
one GRA to another or from a GRA to
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one of the other investment options until the maturity date of the GRA.
Likewise, you may not remove amounts from a GRA prior to maturity in order to
obtain a plan loan or make a hardship or in-service withdrawal. If your plan's
assets are transferred to another funding vehicle from the Program or if your
plan is terminated, we will continue to hold your money in the GRAs until
maturity. All such GRAs will be held in the Pooled Trust under the
investment-only arrangement. See "Guaranteed Rate Accounts" in the prospectus.
We do not permit withdrawals before maturity unless your plan permits them
and they are exempt or qualified, as we explain below. You may take exempt
withdrawals without penalty at any time. Qualified withdrawals are subject to a
penalty. We do not permit qualified withdrawals from a five-year GRA during the
first two years after the end of its offering period. This rule does not apply
if the amount of the applicable penalty is less than the interest you have
accrued. If you have more than one GRA and you are taking a partial withdrawal
or installments, we will first use amounts held in your most recently purchased
three-year or five-year GRA that is available under the withdrawal rules for
exempt and qualified withdrawals. Please note that withdrawals, transfers,
reallocations on maturity and benefit distributions from GRAs provided by a
carrier other than Equitable Life are subject to Equitable Life's receipt of
the proceeds of such GRA from such carrier.
Exempt Withdrawal. Amounts may be withdrawn without penalty from a GRA prior to
its maturity if:
o you are a dentist age 59 1/2 or older and you elect an installment payout
of at least three years or an annuity benefit;
o you are not a dentist and you attain age 59 1/2 or terminate employment
(including retirement);
o you are disabled;
o you attain age 70 1/2; or
o you die.
Qualified Withdrawal. You may withdraw amounts with a penalty from a GRA prior
to its maturity if you are a dentist and are taking payments upon retirement
after age 59 1/2 under a distribution option of less than three years duration.
The interest paid to you upon withdrawal will be reduced by an amount
calculated as follows:
(i) the amount by which the three-year GRA rate being offered on the
date of withdrawal exceeds the GRA rate from which the withdrawal
is made, times
(ii) the years and/or fraction of a year until maturity, times
(iii) the amount withdrawn from the GRA.
We will make this calculation based on GRA rates without regard to deductions
for the applicable Program expense charge. If the three-year GRA is not being
offered at the time of withdrawal, the adjustment will be based on then current
rates on U.S. Treasury notes or for a comparable option under the Program.
We will never reduce your original contributions by this adjustment. We make no
adjustment if the current three-year GRA rate is equal to or less than the rate
for the GRA from which we make the qualified withdrawal. We calculate a
separate adjustment for each GRA. If the interest accumulated in one GRA is
insufficient to recover the amount calculated under the formula, we may deduct
the excess as necessary from interest accumulated in other GRAs of the same
duration.
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Example: You contribute $1,000 to a three-year GRA on January 1 with a rate of
4%. Two years later you make a qualified withdrawal. Your GRA balance is
$1,082. The current GRA rate is 6%; (i) 6%--4%=2%, (ii) 2% X 1 year=2%, (iii)
2% X $1,082=$21.64. The withdrawal proceeds would be $1,082-$21.64=$1,060.36.
MATURING GRAS. Your confirmation notice lists the maturity date for each GRA
you hold.
You may arrange in advance for the reinvestment of your maturing GRAs by using
the AIM System. (GRA maturity allocation change requests received on a business
day before 4:00 P.M. Eastern Time are effective four days after we receive
them. GRA maturity allocation change requests received after 4:00 P.M. Eastern
Time or on a non-business day are effective four days after the next business
day after we receive them.)
o The instructions you give us remain in effect until you change them
(again, your GRA maturity allocation change request will be processed as
described above).
o You may have different instructions for your GRAs attributable to
employer contributions than for your GRAs attributable to employee
contributions.
o If you have never provided GRA maturity instructions, your maturing GRAs
will be allocated to the Money Market Guarantee Account.
SPECIAL RULES FOR DISTRIBUTIONS AND TRANSFERS FROM THE REAL ESTATE FUND. At
times of insufficient liquidity, we may delay withdrawals from the Real Estate
Fund and Prime Property Fund in accordance with the procedures described below.
As of the date of this SAI, the Real Estate Fund is fulfilling withdrawal
requests on a current basis. You may call us to receive current information
regarding the status of Real Estate Fund withdrawals. See "Special Risks
Related to the Real Estate Fund" in the prospectus for more information.
THERE IS A MINIMUM WAIT OF ONE CALENDAR QUARTER FOR WITHDRAWALS FROM THE REAL
ESTATE FUND. All distributions and transfers from the Real Estate Fund are
scheduled to be made shortly after the end of the calendar quarter following
the quarter in which we receive properly completed withdrawal request forms.
The amount distributed is based on the Real Estate Fund's unit value on the
date distribution is made. Withdrawals from the Real Estate Fund must be made
in amounts of at least $1,000 or, if less, your balance in the Real Estate
Fund.
IN ADDITION TO THE WAIT OF AT LEAST ONE CALENDAR QUARTER WHICH IS REQUIRED BY
OUR PROCEDURES, IT IS ALSO POSSIBLE THAT THE REAL ESTATE FUND MAY NOT HAVE
ENOUGH CASH TO MAKE ALL WITHDRAWALS AND TRANSFERS WHEN REQUESTED. If at the end
of a calendar quarter the Real Estate Fund does not have enough cash to pay all
scheduled withdrawals, the withdrawals will be divided into two priority
categories:
o Priority 1 consists of all amounts requested because of death or
disability or after age 70 1/2.
o Priority 2 consists of all other requests.
The Real Estate Fund will satisfy all scheduled Priority 1 distribution
requests before it satisfies any Priority 2 request, even if the Priority 1
requests were received after the Priority 2 requests. If the Real Estate Fund
does not have enough cash to make all Priority 1 distributions, distributions
will be paid in the order that requests are received. After making all Priority
1 distributions, the Real Estate Fund will make Priority 2 distributions and
transfers. If the Real Estate Fund is unable to satisfy all scheduled Priority
2 distributions and transfer requests, the requests will be paid in the order
that requests are received.
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To make Priority 1 distributions, the Real Estate Fund will use substantially
all its liquid assets, keeping only a reserve that we believe is adequate for
anticipated expenses. If possible, the Real Estate Fund will also liquidate as
much of its interest in Prime Property Fund as required. With regard to
Priority 2, we will make distributions and transfers to the extent that funds
are available from cash flow and from liquidation of Prime Property Fund units.
However, we will not make Priority 2 distributions and transfers if the Real
Estate Fund cannot liquidate enough of its interest in Prime Property Fund and
we believe that it would be desirable to maintain liquidity to meet anticipated
Priority 1 distributions.
Requests that remain unpaid will be scheduled for the next quarterly
distribution date. At that time these requests will be satisfied to the extent
possible, in accordance with their respective priorities and order of receipt.
Please note that if you make a Priority 2 request that is not paid when
scheduled, Priority 1 distributions requested in later quarters may be paid
before your Priority 2 request.
REAL ESTATE FUND WITHDRAWALS FROM PRIME PROPERTY FUND. If the Real Estate Fund
does not have enough liquid assets to pay all requested withdrawals, it will
seek to withdraw some or all of its interest from Prime Property Fund. We may
postpone withdrawals from Prime Property Fund, however, for such time as we
reasonably consider necessary to obtain the amount to be withdrawn or to
protect the interests of other participants in Prime Property Fund. In making
this determination, we consider primarily (i) the availability of cash to
manage Prime Property Fund's property holdings, to meet emergencies and to meet
commitments for property acquisitions and loans, (ii) the time necessary to
dispose of properties and (iii) any adverse impact of proposed property sales
on other participants in Prime Property Fund.
If withdrawal from Prime Property Fund is restricted, any payment from Prime
Property Fund is applied pro rata to the withdrawal requests of all
participants in Prime Property Fund that are eligible for payment on the
withdrawal date, regardless of when those requests were made. Prime Property
Fund withdrawal requests not satisfied by a pro rata distribution are deferred
until the next withdrawal date (generally the last business day of the
following quarter), at which time the amount available for distribution will
again be applied pro rata to all pending requests. For purposes of this policy,
the Real Estate Fund is considered a single participant in Prime Property Fund,
on a par with each other participant in Prime Property Fund. From the first
quarter of 1995 through the third quarter of 1995, Prime Property Fund
satisfied all participant withdrawal requests. As of the fourth quarter of
1995, Prime Property Fund was unable to satisfy all participant withdrawal
requests. Consequently, withdrawals from Prime Property Fund are being delayed
in accordance with the procedures discussed above. However, since June 1994 the
Real Estate Fund has had sufficient liquidity, and we have not restricted
withdrawals. If the Real Estate Fund experiences periods of insufficient
liquidity withdrawals may be delayed as described above under "Special Rules
for Distributions and Transfers from the Real Estate Fund." There have been
other periods when there was insufficient available cash in Prime Property Fund
to meet all withdrawal requests. During these other periods Real Estate Fund
withdrawals were not delayed or restricted in any manner because the Real
Estate Fund was sufficiently liquid.
A withdrawal from Prime Property Fund by one or more of its larger investors
could significantly reduce its cash position and increase the likelihood that
the Real Estate Fund would not have cash sufficient to meet all withdrawal
requests. At December 31, 1998 there were 170 plans in Prime Property Fund,
none of which held more than 6.0% of Prime Property Fund.
TYPES OF BENEFITS
Under the Master Plan, and under most self-directed prototype plans, you may
select one or more of the following forms of distribution once you are eligible
to receive benefits. If your employer has adopted an
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individually designed plan or a self-directed prototype profit sharing plan
that does not offer annuity benefits, not all of these distribution forms may
be available to you. We suggest you ask your employer what types of benefits
are available under your plan.
QUALIFIED JOINT AND SURVIVOR ANNUITY. An annuity providing equal monthly
payments for your life and, after your death, for your surviving spouse's life.
No payments will be made after you and your spouse die, even if you have
received only one payment prior to the last death. THE LAW REQUIRES THAT IF THE
VALUE OF YOUR VESTED BENEFITS EXCEEDS $5,000, YOU MUST RECEIVE A QUALIFIED
JOINT AND SURVIVOR ANNUITY UNLESS YOUR SPOUSE CONSENTS IN WRITING TO A CONTRARY
ELECTION. Please see "Spousal Consent Requirements" below.
LUMP SUM PAYMENT. A single payment of all or part of your vested benefits. If
you take a lump sum payment of only part of your balance, it must be at least
$1,000. If you have more than one GRA, amounts held in your most recent GRA
will first be used to make payment. If your vested benefit is $5,000 or less,
you will receive a lump sum payment of the entire amount.
PERIODIC INSTALLMENTS. Monthly, quarterly, semi-annual or annual payments over
a period of at least three years, where the initial payment on a monthly basis
is at least $300. You can choose either a time-certain payout, which provides
variable payments over a specified period of time, or a dollar-certain payout,
which provides level payments over a variable period of time. During the
installment period, your remaining account balance will be invested in whatever
investment options you designate, other than the Real Estate Fund; each payment
will be drawn pro rata from all the investment options you have selected. You
may not leave or place any assets in the Real Estate Fund. If you have more
than one GRA, amounts held in your most recently purchased three-year or
five-year GRA will first be used to make installment payments. If you die
before receiving all the installments, we will make the remaining payments to
your beneficiary, subject to IRS minimum distribution rules and beneficiary
election.
LIFE ANNUITY. An annuity providing monthly payments for your life. No payments
will be made after your death, even if you have received only one payment prior
to your death.
LIFE ANNUITY--PERIOD CERTAIN. An annuity providing monthly payments for your
life or, if longer, a specified period of time. If you die before the end of
that specified period, payments will continue to your beneficiary until the end
of the period. Subject to legal limitations, you may specify a minimum payment
period of 5, 10, 15 or 20 years. The longer the specified period, the smaller
the monthly payments will be.
JOINT AND SURVIVOR ANNUITY. An annuity providing monthly payments for your life
and that of your beneficiary. You may specify the percentage of the original
annuity payment to be made to your beneficiary. Subject to legal limitations,
that percentage may be 100%, 75%, 50%, or any other percentage you specify.
JOINT AND SURVIVOR ANNUITY--PERIOD CERTAIN. An annuity providing monthly
payments for your life and that of your beneficiary or, if longer, a specified
period of time. If you and your beneficiary both die before the end of the
specified period, payments will continue to your contingent beneficiary until
the end of the period. Subject to legal limitations, you may specify a minimum
payment period of 5, 10, 15 or 20 years and the percentage of the annuity
payment to be made to your beneficiary (as noted above under Joint and Survivor
Annuity). The longer the specified period, the smaller your monthly payments
will be.
CASH REFUND ANNUITY. An annuity providing equal monthly payments for your life
with a guarantee that the sum of those payments will be at least equal to the
portion of your vested benefits used to purchase the annuity. If upon your
death the sum of the monthly payments to you is less than that amount, your
beneficiary will receive a lump sum payment of the remaining guaranteed amount.
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FIXED AND VARIABLE ANNUITY CHOICES
Under a Qualified Joint and Survivor Annuity or a Cash Refund Annuity, the
amount of the monthly payments is fixed at retirement and remains level
throughout the distribution period. Under the Life Annuity, Life
Annuity--Period Certain, Joint and Survivor Annuity and Joint and Survivor
Annuity--Period Certain, you may select either fixed or variable payments. All
forms of variable annuity benefits under the Program will be provided by us.
The payments under variable annuity options reflect the investment performance
of the Growth Equity Fund. If you are interested in a variable annuity, when
you are ready to select your benefit please ask our Account Executives for our
variable annuity prospectus supplement.
Fixed annuities will be issued by insurance companies selected by the ADA
Trustees from time to time. We do not currently offer fixed annuities under the
Program. Upon your request, the companies selected by the Trustees will provide
annuity benefit information. We have no further responsibility for the amount
used to purchase a fixed annuity once it has been sent to the insurance company
you select. The cost of a fixed annuity is determined by each issuing insurance
company. Your Account Executive has more details regarding the insurance
companies currently providing annuity benefits under the Program.
SPOUSAL CONSENT REQUIREMENTS
Under the Master Plan and the self-directed prototype plan, you may designate a
non-spouse beneficiary any time after the earlier of: (1) the first day of the
plan year in which you attain age 35, or (2) the date on which you separate
from service with your employer. If you designate a beneficiary other than your
spouse prior to your reaching age 35, your spouse must consent to the
designation and, upon your reaching age 35, must again give his or her consent
or the designation will lapse. In order for you to make a withdrawal, elect a
form of benefit other than a Qualified Joint and Survivor Annuity or designate
a non-spouse beneficiary, your spouse must consent to your election in writing
within the 90 day period before your annuity starting date. To consent, your
spouse must sign on the appropriate line on your election of benefits or
beneficiary designation form. Your spouse's signature must be witnessed by a
notary public or plan representative.
If you change your mind, you may revoke your election and elect a qualified
Joint Survivor Annuity or designate your spouse as beneficiary, simply by
filing the appropriate form. Your spouse's consent is not required for this
revocation.
It is also possible for your spouse to sign a blanket consent form. By signing
this form, your spouse consents not just to a specific beneficiary or, with
respect to the waiver of the Qualified Joint and Survivor Annuity, the form of
distribution, but gives you the right to name any beneficiary, or if
applicable, form of distribution you want. Once you file such a form, you may
change your election whenever you want, even without spousal consent. No
spousal consent to a withdrawal or benefit in a form other than a Qualified
Joint and Survivor Annuity is required under certain self-directed prototype
profit sharing plans that do not offer life annuity benefits.
PROVISIONS OF THE MASTER PLAN
PLAN ELIGIBILITY REQUIREMENTS. Under the Master Plan, the employer specifies
the eligibility requirements for its plan in the Participation Agreement. The
employer may exclude any employee who has not attained a specified age (not to
exceed 21) and completed a specified number of years (not to exceed two) in
each of which he completed 1,000 hours of service. No more than one year of
eligibility service may be required for a 401(k) arrangement.
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The employer may also exclude salaried dentists (those with no ownership
interest in the practice), employees of related employers, leased employees and
certain other types of employees at the employer's election, provided such
exclusion does not cause the plan to discriminate in favor of "highly
compensated" employees (defined below). The Master Plan provides that a partner
or shareholder may, upon commencement of employment or upon first becoming
eligible to participate in any qualified plan of the employer, make a one-time
irrevocable election not to participate in the plan or to make a reduced
contribution. This election applies to all plans of the employer, now and in
the future, and should be discussed with your tax advisor.
CONTRIBUTIONS TO QUALIFIED PLANS. We outline below the current Federal income
tax rules relating to contributions under qualified retirement plans. This
outline assumes that you are not a participant in any other qualified
retirement plan.
The employer deducts contributions to the plan in the year it makes them. As a
general rule, an employer must make contributions for any year by the due date
(including extensions) for filing its Federal income tax return for that year.
However, Department of Labor ("DOL") rules generally require that the employer
contribute participants' salary deferral (or post-tax employee contribution)
amounts under a 401(k) plan as soon as possible after the payroll period
applicable to a deferral. In any event, the employer must make these
contributions no later than the 15th business day of the month following the
month in which the employer withholds or receives participant contributions.
If the employer contributes more to the plan than it may deduct under the rules
we describe below, the employer (a) may be liable for a 10% penalty tax on that
nondeductible amount and (b) may risk disqualifying the plan.
CONTRIBUTIONS TO THE MASTER PLAN. The employer makes annual contributions to
its plan based on the plan's provisions.
An employer that adopts the Master Plan as a profit sharing plan makes
discretionary contributions as it determines annually. The aggregate employer
contribution to the plan, including all participants' salary deferrals under a
401(k) arrangement, may not exceed 15% of all participants' compensation for
the plan year. For plan purposes, compensation for self-employed persons does
not include deductible plan contributions on behalf of the self-employed
person.
A 401(k) arrangement is available as part of the profit sharing plan. Employees
may make pre-tax contributions to a plan under a 401(k) arrangement. The
maximum amount that highly compensated employees may contribute depends on (a)
the amount that non-highly compensated employees contribute and (b) the amount
the employer designates as a nonforfeitable 401(k) contribution. Different
rules apply to a SIMPLE 401(k) or safe harbor 401(k).
For 1999, a "highly compensated" employee, for this purpose, is (a) an owner of
more than 5% of the practice, or (b) anyone with earnings of more than $80,000
from the practice in 1998. For (b), the employer may elect to include only
employees in the highest paid 20%. In any event, the maximum amount each
employee may defer is limited to $10,000 for 1999, reduced by that employee's
salary reduction contributions to simplified employee pension plans established
before 1997 (SARSEPs), SIMPLE plans, employee contributions to tax deferred
Section 403(b) arrangements, and contributions deductible by the employee under
a trust described under Section 501(c)(18) of the Internal Revenue Code. The
maximum amount a participant may defer in a SIMPLE 401(k) plan for 1999 is
$6,000.
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Effective January 1, 1999 employers may adopt a safe harbor 401(k) arrangement.
Under this arrangement, an employer agrees to offer a matching contribution
equal to (a) 100% of salary deferral contributions up to 3% of compensation and
(b) 50% of salary deferral contributions that exceed 3% but are less than 5% of
compensation or a 2% non-elective contribution to all eligible employees. These
contributions must be non-forfeitable. If the employer makes these
contributions and meets the notice requirements for safe harbor 401(k) plans,
the plan is not subject to non-discrimination testing on salary deferral and
matching or non-elective contributions described above.
If the employer adopts the Master Plan as a defined contribution pension plan,
its contribution is equal to the percentage of each participant's compensation
that the Participation Agreement specifies.
Under any type of plan, an employer must disregard compensation in excess of
$160,000 in 1999 in making contributions. An employer may integrate
contributions with Social Security. This means that contributions, for each
participant's compensation, that exceed the integration level may be greater
than contributions for compensation below the integration level. The Federal
tax law imposes limits on this excess. Your Account Executive can help you
determine the legally permissible contribution.
Contributions for non-key employees must be at least 3% of compensation (or,
under the profit sharing plan, the percentage the employer contributes for key
employees, if less than 3%). In 1999, "key employee" means (a) an owner of one
of the ten largest (but more than 1/2%) interests in the practice with earnings
of more than $30,000, or (b) an officer of the practice with earnings of more
than $65,000 or (c) an owner of more than 5% of the practice, or (d) an owner
of more than 1% of the practice with earnings of more than $150,000. For
purposes of (b), no more than 50 employees (or, if less, the greater of three
or 10% of the employees) shall be treated as officers.
Certain plans may also permit participants to make post-tax contributions. We
will maintain a separate account to reflect each participant's post-tax
contributions and the earnings (or losses) on those contributions. Post-tax
contributions are subject to complex rules under which the maximum amount that
a highly compensated employee may contribute depends on the amount that
non-highly employees contribute. BEFORE PERMITTING ANY HIGHLY-COMPENSATED
EMPLOYEE TO MAKE POST-TAX CONTRIBUTIONS, THE EMPLOYER SHOULD VERIFY THAT IT HAS
PASSED ALL NON-DISCRIMINATION TESTS. If an employer employs only "highly
compensated" employees (as defined above), the plan will not accept post-tax
contributions. In addition, the employer may make matching contributions to
certain plans, i.e., contributions based on the amount of post-tax or pre-tax
401(k) contributions that plan participants make. Special non-discrimination
rules apply to matching contributions. These rules may limit the amount of
matching contributions that an employer may make for highly compensated
employees. These non-discrimination rules for matching contributions generally
do not apply to SIMPLE and safe harbor 401(k) plans.
Contributions (including forfeiture amounts) for each participant may not
exceed the lesser of (a) $30,000 and (b) 25% of the participant's earnings
(excluding, in the case of self-employed persons, all deductible plan
contributions). The participant's post-tax contributions count toward this
limitation.
Each participant's account balance equals the sum of the amounts accumulated in
each investment option. We will maintain separate records of each participant's
interest in each of the investment options attributable to employer
contributions, 401(k) non-elective contributions, 401(k) elective
contributions, post-tax employee contributions and employer matching
contributions. We will also account separately for any amounts rolled over from
a previous employer's plan. Our records will also reflect each participant's
percentage of vesting (see below) in his account balance attributable to
employer contributions and employer matching contributions.
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The participant will receive an individual confirmation of each transaction
(including the deduction of record maintenance and report fees). The
participant will also receive an annual statement showing the participant's
account balance in each investment option attributable to each type of
contribution. Based on information that you supply, we will run the required
special non-discrimination tests (Actual Deferral Percentage and Actual
Contribution Percentage) applicable to (a) 401(k) plans (other than SIMPLE
401(k) and safe harbor 401(k)) and (b) plans that accept post-tax employee
contributions or employer matching contributions.
Non-discrimination tests do not apply to SIMPLE 401(k) plans, if the employer
makes (a) a matching contribution equal to 100% of the amount each participant
deferred, up to 3% of compensation, or (b) a 2% non-elective contribution to
all eligible employees. The employer must also follow the notification and
filing requirements outlined in the SIMPLE 401(k) model amendment to the Master
Plan to avoid non-discrimination tests.
Under a SIMPLE 401(k) the employer must offer all eligible employees the
opportunity to defer part of their salary into the plan and make either a
matching or non-elective contribution. The matching contribution must be 100%
of the salary deferral amount up to 3% of compensation. The non-elective
contribution is 2% of compensation, the employer must make it for all eligible
employees, even those not deferring. The matching or non-elective contribution
must be non-forfeitable. The employer must notify employees which contribution
the employer will make 60 days before the beginning of the year.
Elective deferrals to a 401(k) plan are subject to applicable FICA (social
security) and FUTA (unemployment) taxes.
ALLOCATION OF CONTRIBUTIONS. You, as employer or participant, may allocate
contributions among any number of the investment options. You may change
allocation instructions at any time, and as often as needed, by calling the AIM
System. New instructions become effective on the business day we receive them.
Employer contributions may be allocated in different percentages than employee
contributions. The allocation percentages elected for employer contributions
automatically apply to any 401(k) qualified non-elective contributions,
qualified matching contributions and matching contributions. Your allocation
percentages for employee contributions automatically apply to any post-tax
employee contributions and 401(k) salary deferral contributions. IF WE HAVE NOT
RECEIVED VALID INSTRUCTIONS, WE WILL ALLOCATE CONTRIBUTIONS TO THE MONEY MARKET
GUARANTEE ACCOUNT. You may, of course, transfer to another investment option at
any time.
THE MASTER PLAN AND SECTION 404(C) OF ERISA. The Master Plan is a participant
directed individual account plan designed to comply with the requirements of
Section 404(c) of ERISA. Section 404(c) of ERISA, and the related Department of
Labor (DOL) regulation, provide that if a participant or beneficiary exercises
control over the assets in his or her plan account, plan fiduciaries will not
be liable for any loss that is the direct and necessary result of the
participant's or beneficiary's exercise of control. This means that if the
employer plan complies with Section 404(c), participants can make and are
responsible for the results of their own investment decisions.
Section 404(c) plans must, among other things, (a) make a broad range of
investment choices available to participants and beneficiaries and (b) provide
them with adequate information to make informed investment decisions. The
Investment Options and documentation available under the ADA Program provide
the broad range of investment choices and information needed in order to meet
the requirements of Section 404(c). However, while our suggested summary plan
descriptions, annual reports, prospectuses,
SAI-12
<PAGE>
- --------------------------------------------------------------------------------
and confirmation notices provide the required investment information, the
employer is responsible for distributing this information in a timely manner to
participants and beneficiaries. You should read this information carefully
before making your investment decisions.
VESTING. Vesting refers to the participant's rights with respect to that
portion of a participant's Account Balance attributable to employer
contributions under the Master Plan. If a participant is "vested," the amount
or benefit in which the participant is vested belongs to the participant, and
may not be forfeited. The participant's Account Balance attributable to (a)
401(k) contributions (including salary deferral, qualified non-elective and
qualified matching contributions), (b) post-tax employee contributions and (c)
rollover contributions always belongs to the participant, and is nonforfeitable
at all times.
A participant becomes fully vested in all benefits if still employed at death,
disability, attainment of normal retirement age or upon termination of the
plan. If the participant terminates employment before that time, any benefits
that have not yet vested under the plan's vesting schedule are forfeited. The
normal retirement age is 65 under the Master Plan.
Benefits must vest in accordance with any of the schedules below or one at
least as favorable to participants:
<TABLE>
<CAPTION>
SCHEDULE A SCHEDULE B SCHEDULE C
YEARS OF VESTED VESTED VESTED
SERVICE PERCENTAGE PERCENTAGE PERCENTAGE
- ---------- ------------ ------------ -----------
<S> <C> <C> <C>
1 0% 0% 0%
2 100 20 0
3 100 40 100
4 100 60 100
5 100 80 100
6 100 100 100
</TABLE>
If the plan requires more than one year of service for participation in the
plan, the plan must use Schedule A or one at least as favorable to
participants.
All contributions to a SIMPLE 401(k) plan are 100% vested and not subject to
the vesting schedule above. This rule, however, does not apply to employer and
matching contributions made to a plan before the plan is amended to become a
SIMPLE 401(k) plan. Non-elective and matching contributions required under a
safe harbor 401(k) arrangement are 100% vested and not subject to the vesting
schedule above.
PRIME PROPERTY FUND INVESTMENTS
Since typically 85% to 100% of the Real Estate Fund's assets are invested in
Prime Property Fund, we provide the following information about the investments
of Prime Property Fund. See "The Real Estate Fund-Investment Strategies" in the
prospectus for a description of Prime Property Fund's real estate investment
strategies and borrowing policies.
At December 31, 1998, Prime Property Fund held 121 investments in wholly-owned
properties and equities in partnerships with an aggregate market value of $3.3
billion.
Prime Property Fund seeks to diversify its property portfolio by type and
location. Prime Property Fund's major holdings (in wholly-owned properties and
equities in partnerships) as of December 31, 1998 included:
SAI-13
<PAGE>
- --------------------------------------------------------------------------------
o 15 retail properties, primarily super-regional shopping centers, with an
aggregate market value of $1.0 billion.
o 29 office properties, with an aggregate market value of $1.4 billion.
o 63 industrial properties (primarily warehouses) and research and
development facilities, with an aggregate market value of $449.8 million.
o 4 hotels, with an aggregate market value of $105.0 million.
o 6 other properties, which include any other income-producing properties
not specifically mentioned above, with an aggregate market value of $86.2
million.
In addition to wholly-owned properties and equities in partnerships, Prime
Property Fund has 4 investments in mortgage loans receivable with an aggregate
market value of $280.7 million, or 8.5% of Prime Property Fund's investments.
Mortgages and common stock may be accepted as partial consideration for
properties sold.
BORROWINGS. Borrowings on eight wholly-owned properties held in Prime Property
Fund as of December 31, 1998 are summarized below.
- --------------------------------------------------------------------------------
Summary of Borrowings*--December 31, 1998
<TABLE>
<S> <C>
Number of mortgages payable ..................... 6
Number of encumbered properties ................. 8
Outstanding borrowings (millions) ............... $ 411.1
Borrowings as a percent of total assets ......... 12.2%
</TABLE>
- ----------
*Prime Property Fund also held interests in real estate partnerships having
total assets of $1.2 billion and total liabilities of $573 million.
- --------------------------------------------------------------------------------
SAI-14
<PAGE>
- --------------------------------------------------------------------------------
HOLDINGS OF PRIME PROPERTY FUND
Below we provide charts that describe the investments in wholly-owned
properties, partnership equities and mortgage-loan receivables and REIT stock
of Prime Property Fund as of December 31, 1998 and for the other periods
indicated.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
DISTRIBUTION OF INVESTMENT VALUE BY TYPE AND LOCATION* (BY PERCENTAGE) --
DECEMBER 31, 1998
- -------------------------------------------------------------------------------
SOUTH EAST MID-WEST WEST TOTAL
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Industrial/R&D 4.5% 2.9% 0.9% 5.4% 13.7%
Office 2.0 23.8 5.2 14.0 45.0
Retail 3.0 13.2 9.8 9.5 35.5
Hotel 0.9 2.3 -- -- 3.2
Other 0.8 1.8 -- -- 2.6
- -------------------------------------------------------------------------------
Total 11.2% 44.0% 15.9% 28.9% 100.0%
- -------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
DISTRIBUTION OF INVESTMENTS BY TYPE AND LOCATION* (BY NUMBER OF
INVESTMENTS) -- DECEMBER 31, 1998
- -------------------------------------------------------------------------------
SOUTH EAST MID-WEST WEST TOTAL
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Industrial/R&D 21 16 6 20 63
Office 2 16 6 7 31
Retail 3 6 5 3 17
Hotel 2 2 -- -- 4
Other 1 4 1 -- 6
- -------------------------------------------------------------------------------
Total 29 44 18 30 121
</TABLE>
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
DISTRIBUTION OF INVESTMENT VALUE BY LOCATION* (BY PERCENTAGE) -- DECEMBER 31,
- -----------------------------------------------------------------------------------------------
1998 1997 1996 1995 1994 1993
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
South 11.2% 14.6% 17.7% 18.5% 19.7% 20.0%
East 44.0 41.2 35.4 35.0 31.0 30.9
Mid-West 15.9 15.3 22.9 24.0 27.3 27.6
West 28.9 27.1 24.0 22.5 22.0 21.5
Not Applicable -- 1.8 -- -- -- --
- -----------------------------------------------------------------------------------------------
</TABLE>
- ------------------
* Each region comprises the states indicated:
South: Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi,
Oklahoma, Tennessee, Texas
East: Connecticut, Delaware, District of Columbia, Kentucky, Maine, Maryland,
Massachusetts, New Hampshire, New Jersey, New York, North Carolina,
Pennsylvania, Rhode Island, South Carolina, Vermont, Virginia, West Virginia
Mid-West: Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri,
Nebraska, North Dakota, Ohio, South Dakota, Wisconsin
West: Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada,
New Mexico, Oregon, Utah, Washington, Wyoming
SAI-15
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
DISTRIBUTION OF INVESTMENT VALUE BY PROPERTY TYPE (BY PERCENTAGE) -- DECEMBER 31,
- -----------------------------------------------------------------------------------------------
1998 1997 1996 1995 1994 1993
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Industrial/R&D 13.7% 14.0% 11.6% 11.0% 10.6% 10.8%
Office 45.0 37.1 30.6 30.1 24.9 25.2
Retail 35.5 40.8 53.0 54.4 60.8 60.0
Hotel 3.2 5.1 3.7 3.5 3.2 2.9
Other 2.6 3.0 1.1 1.0 0.5 1.1
- -----------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
DISTRIBUTION OF INVESTMENT VALUE BY TYPE OF OWNERSHIP (BY PERCENTAGE) -- DECEMBER 31, 1998
- -----------------------------------------------------------------------------------------------
WHOLLY-OWNED EQUITY IN MORTGAGE
REAL ESTATE* PARTNERSHIPS LOANS RECEIVABLE TOTAL
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Industrial/R&D 13.2% 0.5% -- 13.7%
Office 35.8 6.1 3.1% 45.0
Retail 27.6 2.5 5.4 35.5
Hotel 3.2 -- -- 3.2
Other 0.8 1.8 -- 2.6
- -----------------------------------------------------------------------------------------------
Total 80.6% 10.9% 8.5% 100.0%
- -----------------------------------------------------------------------------------------------
</TABLE>
* Title to wholly-owned properties allocated to Prime Property Fund is
generally held in Equitable Life's name.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
DISTRIBUTION OF INVESTMENTS BY VALUE RANGE* -- DECEMBER 31, 1998
- ----------------------------------------------------------------------
INVESTMENT PERCENTAGE OF
VALUE PERCENTAGE OF NUMBER OF TOTAL NUMBER
(MILLIONS) INVESTMENT VALUE INVESTMENTS OF INVESTMENTS
- ----------------------------------------------------------------------
<S> <C> <C> <C>
Under $2.5 0.8% 14 11.5%
$ 2.5-$5 3.0 25 20.7
$ 5-$10 5.3 23 19.0
$ 10-$20 7.6 18 14.9
$ 20-$50 19.4 20 16.5
$ 50-$100 32.6 15 12.4
Over $100 31.3 6 5.0
- ----------------------------------------------------------------------
Total 100.0% 121 100.0%
- ----------------------------------------------------------------------
</TABLE>
* Includes all investments stated at the Fund's ownership share.
SAI-16
<PAGE>
- --------------------------------------------------------------------------------
INVESTMENT RESTRICTIONS APPLICABLE TO THE GROWTH EQUITY FUND
The Growth Equity Fund will not:
o trade in foreign exchange (except transactions incidental to the
settlement of purchases or sales of securities);
o make an investment in order to exercise control or management over a
company;
o underwrite the securities of other companies, including purchasing
securities that are restricted under the 1933 Act or rules or regulations
thereunder (restricted securities cannot be sold publicly until they are
registered under the 1933 Act), except as stated below;
o make short sales, except when the Fund has, by reason of ownership of
other securities, the right to obtain securities of equivalent kind and
amount that will be held so long as they are in a short position;
o trade in commodities or commodity contracts; purchase or write puts
and calls (options);
o purchase real estate or mortgages, except as stated below. The Fund may
buy shares of real estate investment trusts listed on stock exchanges or
reported on the National Association of Securities Dealers, Inc.
automated quotation system ("NASDAQ");
o have more than 5% of its assets invested in the securities of any one
registered investment company. The Fund may not own more than 3% of an
investment company's outstanding voting securities. Finally, total
holdings of investment company securities may not exceed 10% of the value
of the Fund's assets;
o purchase any security on margin or borrow money except for short-term
credits necessary for clearance of securities transactions;
o make loans, except loans through the purchase of debt obligations or
through entry into repurchase agreements; or
o invest more than 10% of its total assets in restricted securities, real
estate investments, or portfolio securities not readily marketable.
o make an investment in an industry if that investment would make the
Fund's holding in that industry exceed 25% of its assets. The United
States government, and its agencies and instrumentalities, are not
considered members of any industry.
HOW WE DETERMINE UNIT VALUES FOR THE FUNDS
THE EQUITY FUNDS. We determine the unit value for each Equity Fund at the end
of each business day. The unit value for each Fund is calculated by first
determining a gross unit value, which reflects only investment performance, and
then adjusting it for Fund expenses to obtain the Fund unit value. We determine
the gross unit value by multiplying the gross unit value for the preceding
business day by the net investment factor for that subsequent business day (for
the Growth Equity Fund we also subtract any audit and custodial fees). We
calculate the net investment factor as follows:
o First, we take the value of the Fund's assets at the close of business
on the preceding business day.
o Next, we add the investment income and capital gains, realized and
unrealized, that are credited to the assets of the Fund during the
business day for which we are calculating the net investment factor.
SAI-17
<PAGE>
- --------------------------------------------------------------------------------
o Then we subtract the capital losses, realized and unrealized, charged
to the Fund during that business day.
o Finally, we divide this amount by the value of the Fund's assets at the
close of the preceding business day.
The Fund unit value is calculated on every business day by multiplying the Fund
unit value for the last business day of the previous month by the net change
factor for that business day. The net change factor for each business day is
equal to (a) minus (b) where:
(a) is the gross unit value for that business day divided by the gross unit
value for the last business day of the previous month; and
(b) is the charge to the Fund for that month for the daily accrual of fees and
other expenses times the number of days since the end of the preceding month.
THE REAL ESTATE FUND. We determine the unit value for the Real Estate Fund once
each month, generally as of the close of business on the first business day
after the day the unit value for Prime Property Fund is known. We first
determine the gross unit value, which is equal to (a) plus (b) plus (c) divided
by (d), where
(a) is the aggregate value of all units of Prime Property Fund held by the Real
Estate Fund determined as of the last business day of the preceding month;
(b) is the aggregate value of all units of Separate Account No. 2A and cash or
cash equivalents held by the Real Estate Fund, determined as of the close of
business on the day the Real Estate Fund unit value is known;
(c) is the net value of all other assets and liabilities of the Real Estate
Fund, determined as of the close of business on the day the Real Estate Fund
unit value is known; and
(d) is the total number of Real Estate Fund Units outstanding.
To obtain the Real Estate Fund unit value, we then adjust this gross unit value
for Fund fees and other expenses at rates equal to 1/12 of the annual rates.
For information on how we value the assets of Prime Property Fund held by the
Real Estate Fund, see the next section of the SAI. We discuss valuation of the
units of Separate Account No. 2A and cash equivalents held by the Real Estate
Fund in the next section under The Growth Equity Fund--Short-Term Debt
Securities.
HOW WE VALUE THE ASSETS OF THE INVESTMENT FUNDS
THE GROWTH EQUITY FUND. The assets of the Growth Equity Fund are valued as
follows:
o STOCKS listed on national securities exchanges or traded on the NASDAQ
national market system are valued at the last sale price. If on a
particular day there is no sale, the stocks are valued at the latest
available bid price reported on a composite tape. Other unlisted
securities reported on the NASDAQ system are valued at inside (highest)
quoted bid prices.
SAI-18
<PAGE>
- --------------------------------------------------------------------------------
o FOREIGN SECURITIES not traded directly, or in ADR form, in the United
States, are valued at the last sale price in the local currency on an
exchange in the country of origin. Foreign currency is converted into
dollars at current exchange rates.
o UNITED STATES TREASURY SECURITIES and other obligations issued or
guaranteed by the United States Government, its agencies or
instrumentalities are valued at representative quoted prices.
o LONG-TERM PUBLICLY TRADED CORPORATE BONDS (i.e., maturing in more than
one year) are valued at prices obtained from a bond pricing service of a
major dealer in bonds when such prices are available; however, in
circumstances where it is deemed appropriate to do so, an over-the-counter
or exchange quotation may be used.
o CONVERTIBLE PREFERRED STOCKS listed on national securities exchanges
are valued at their last sale price or, if there is no sale, at the latest
available bid price.
o CONVERTIBLE BONDS and UNLISTED CONVERTIBLE PREFERRED STOCKS are valued
at bid prices obtained from one or more major dealers in such securities;
where there is a discrepancy between dealers, values may be adjusted based
on recent premium spreads to the underlying common stock.
o SHORT-TERM DEBT SECURITIES that mature in more than 60 days are valued
at representative quoted prices. Short-term debt securities that mature in
60 days or less are valued at amortized cost, which approximates market
value. The Growth Equity Fund, as well as the Real Estate Fund, may also
acquire short-term debt securities through units in our Separate Account
No. 2A. These unit values are calculated in the same way as Fund Units.
The assets of Separate Account No. 2A are valued as described above.
Our investment officers determine in good faith the fair value of securities
and other assets that do not have a readily available market price in
accordance with accepted accounting practices and applicable laws and
regulations.
OTHER EQUITY FUNDS. The Aggressive Equity Fund, ADA Foreign Fund, Equity Index
Fund, Equity Income Fund and the Lifecycle Funds--Conservative and Moderate,
invest all of their assets in the MFS Emerging Growth Fund, Templeton Foreign
Fund, SSgA S&P 500 Index Fund, Putnam Equity Income Fund and Lifecycle Fund
Group Trusts--Conservative and Moderate, respectively. The Group Trusts, in
turn, invests all of their assets in the Underlying State Street Funds.
The asset value of the MFS Emerging Growth Fund, the Templeton Foreign
Fund--Class A, the SSgA S&P 500 Index Fund and the Putnam Equity Income Fund is
computed on a daily basis by each of these funds. See the prospectus each of
these Underlying Mutual Funds for information on valuation methodology. See our
separate prospectus for the Lifecycle Funds for information on valuation
methodology with respect to the investments of those Funds.
SAI-19
<PAGE>
- --------------------------------------------------------------------------------
ASSETS HELD IN PRIME PROPERTY FUND. The values of real estate investments are
estimated in accordance with the policies and procedures of the Appraisal
Institute. Ultimate realization of the market values is dependent to a great
extent on economic and other conditions that are beyond management's control
(such as general economic conditions, conditions affecting tenants and other
events occurring in the markets in which individual properties are located).
Further, values may or may not represent the prices at which the real estate
investments would sell since market prices of real estate investments can only
be determined by negotiation between a willing buyer and seller. Market value
considers the financial aspects of a property, market transactions and the
relative yield for an asset as measured against alternative investments. During
the first three quarters of 1998, appraisal of the real properties held by
Prime Property Fund were prepared by our valuation staff or by third-party
appraisers. All staff appraisals were concurred with and reviewed by one of
three designated third party appraisal firms, which also physically inspected
one-third of the properties on a rotating basis. In the fourth quarter of 1998,
all appraisals were prepared by independent external appraisers. The external
appraisals are reviewed by the external appraisal management firm and the Lend
Lease chief appraiser. All appraisal reports and appraisal reviews comply with
the currently published Uniform Standards of Professional Appraisal Practice,
as promulgated by the Appraisal Institute. Appraised values do not necessarily
represent the prices at which the real estate investments would sell since
sales prices are determined by negotiation between willing buyers and sellers.
The values of real estate properties and partnership equities are determined
giving consideration to income, cost, and market data approaches of estimating
property value. The income approach projects an income stream for a property
(typically 10 years) and discounts this income plus a reversion (presumed sale)
into a present value. Yield rates and growth assumptions utilized in this
approach are derived from market transactions as well as other financial and
demographic data. The cost approach estimates the replacement cost of the
building less depreciation plus the land value. Generally, this approach
provides a check on the income approach. The market data approach compares
recent transactions to the appraised property. Adjustments are made for
dissimilarities which typically provide a range of value. Generally, the income
approach carries the most weight in the value reconciliation.
Investment values are determined quarterly from limited restricted appraisals,
in accordance with the Uniform Standards of Professional Appraisal Practice,
which include less documentation but nevertheless meet minimum requirements of
the Appraisal Standards Board and the Appraisal Institute and are considered
appraisals. In these appraisals, a full discounted cash flow analysis, which is
the basis of an income approach, is the primary focus. Interim monthly
valuations are determined giving consideration to material investment
transactions. Full appraisal reports on selected properties are prepared on a
rotating basis.
We value partnership equities using Prime Property Fund's equity in the net
assets of the partnerships, in accordance with the valuation procedures
described above.
During the past five years, on average, net proceeds from sales of properties
in which Equitable Life retained no equity interest equaled approximately 99.9%
of their most recent quarterly valuation.
The fair value of mortgage loans receivable held in Prime Property Fund has
been determined by one or more of the following criteria as appropriate: (i) on
the basis of estimated market interest rates for loans of comparable quality
and maturity, (ii) by recognizing the value of equity participations and
options to enter into equity participations contained in certain loan
instruments and (iii) giving consideration to the value of the underlying
security.
SAI-20
<PAGE>
- --------------------------------------------------------------------------------
See Notes to the Financial Statements of Separate Account No. 8 (Prime Property
Fund) in this SAI for more information about the valuation of investments in
Prime Property Fund.
GROWTH EQUITY FUND TRANSACTIONS
The Growth Equity Fund is charged for securities brokers' commissions, transfer
taxes and other fees relating to securities transactions. Transactions in
equity securities for a Fund are executed primarily through brokers that
receive a commission paid by the Fund. The brokers are selected by Alliance
Capital Management L.P. ("Alliance") and Equitable Life. For 1998, 1997 and
1996, the Growth Equity Fund paid $4,288,187, $3,698,148, and $5,682,578,
respectively, in brokerage commissions.
We and Alliance seek to obtain the best price and execution of all orders
placed for the portfolios of the funds, considering all the circumstances. If
transactions are executed in the over-the-counter market, we and Alliance deal
with the principal market makers, unless more favorable prices or better
execution is otherwise obtainable. On occasion, we and Alliance may execute
portfolio transactions for the Funds as part of concurrent authorizations to
purchase or sell the same security for certain other accounts or clients that
we or Alliance advise. These concurrent authorizations potentially can be
either advantageous or disadvantageous to the Funds. When the concurrent
authorizations occur, our objective is to allocate the executions among the
Funds and the other accounts in a fair manner.
We also consider the amount and quality of securities research services
provided by a broker. Typical research services include general economic
information and analyses and specific information on and analyses of companies,
industries and markets. The factors we use to evaluate research services
include the diversity of sources used by the broker, and the broker's
experience, analytical ability, and professional stature. Our receipt of
research services from brokers tends to reduce our expenses in managing the
Funds. We take this expense reduction into account when setting the expense
charges.
Brokers who provide research services may charge somewhat higher commissions
than those who do not. However, we only select brokers whose commissions we
believe are reasonable in all the circumstances. Of the brokerage commissions
paid by the Growth Equity Fund during 1998, $1,484,034 was paid to brokers
providing research services on transactions of $2,542,807,630.
We periodically evaluate the services provided by brokers and prepare internal
proposals for allocating among those various brokers business for all the
accounts that we manage or advise. That evaluation involves consideration of
the overall capacity of the broker to execute transactions, its financial
condition, its past performance and the value of research services provided by
the broker in servicing the various accounts advised or managed by us. We have
no binding agreements with any firm as to the amount of brokerage business
which the firm may expect to receive for research services or otherwise. There
may, however, be understandings with certain firms that we will continue to
receive services from such firms only if such firms are allocated a certain
amount of brokerage business. We may try to allocate such amounts of business
to such firms to the extent possible in accordance with the policies described
above.
We may use the research information we obtain in servicing all accounts under
our management, including our general account. Similarly, not all research
provided by a broker or dealer with which the Fund transacts business
necessarily will be used in connection with the Fund.
When making securities transactions for the Fund 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
SAI-21
<PAGE>
- --------------------------------------------------------------------------------
at the best price. Subject to this general objective, we may give orders to
dealers or underwriters who provide investment research, but the Fund will not
pay a higher price. The fact that we may benefit from such research is not
considered in setting the expense charges.
In addition to using brokers and dealers to execute portfolio securities
transactions for accounts we manage, we may enter into other types of business
transactions with brokers or dealers. These other transactions will be
unrelated to allocation of the Funds' portfolio transactions.
PRIME PROPERTY FUND TRANSACTIONS
Prime Property Fund is charged separately for fees paid to independent property
managers, outside legal expenses, operating expenses, real estate taxes and
insurance premiums. Compass Management & Leasing ("Compass") and ERE Yarmouth
Retail Group, affiliates of Lend Lease, had been retained to provide management
and leasing services for certain properties of Prime Property Fund. On
September 30, 1998, Lend Lease sold Compass and ERE Yarmouth Retail Group to
LaSalle Partners Incorporated ("LaSalle"). LaSalle will continue to manage
certain properties for Prime Property Fund and Lend Lease will continue to
engage LaSalle to provide similar services from time to time on a non exclusive
basis. During 1998, Compass, ERE Yarmouth Retail Group and LaSalle earned an
aggregate of $10.5 million in property management and leasing fees from Prime
Property Fund.
INVESTMENT MANAGEMENT FEE
The table below shows the amount we received in investment management fees
under the Program during each of the last three years. See "Charges and
Expenses" in the prospectus.
<TABLE>
<CAPTION>
1998 1997 1996
------------- ----------- -----------
<S> <C> <C> <C>
Growth Equity Fund .......... $1,030,425 $981,577 $852,622
Real Estate Fund ............ $ 48,146 42,978 42,470
</TABLE>
UNDERWRITER
EQ Financial Consultants, Inc. ("EQ Financial"), a wholly-owned subsidiary of
Equitable Life, may be deemed to be the principal underwriter of separate
account units under the group annuity contract. EQ Financial is registered with
the SEC as a broker-dealer under the Securities Exchange Act of 1934 and is a
member of the National Association of Securities Dealers, Inc. EQ Financial's
principal business address is 1290 Avenue of the Americas, New York, NY 10104.
The offering of the units under the contract is continuous. We have paid no
underwriting commissions during any of the last three fiscal years with respect
to units of interest under the contract. See "Charges and Expenses" in the
prospectus. During 1999 EQ Financial plans to change its name to AXA Advisors,
Inc.
SAI-22
<PAGE>
- --------------------------------------------------------------------------------
OUR MANAGEMENT
We are managed by a Board of Directors which is elected by our shareholder. Our
directors and certain of our executive officers and their principal occupations
are as follows:
<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
Jean-Rene Fourtou Chairman and Chief Executive Officer, Rhone Poulenc, S.A.
Norman C. Francis President, Xavier University of Louisiana
Donald J. Greene Counselor-at-Law, Partner, Le Boeuf, Lamb, Greene & MacRae
John T. Hartley 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, Best Foods Grocery; Vice President, Best Foods
W. Edwin Jarmain President, Jarmain 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 and Chief Executive Officer, American Cyanamid
Company
Dave H. Williams Chairman and Chief Executive Officer, Alliance Capital Management
Corporation
</TABLE>
SAI-23
<PAGE>
- --------------------------------------------------------------------------------
Unless otherwise indicated, the following persons have been involved in the
management of Equitable Life in various executive positions during the last
five years.
<TABLE>
<CAPTION>
OFFICER-DIRECTORS
NAME PRINCIPAL OCCUPATION
- ------------------ ----------------------------------------------------------------------
<S> <C>
Edward D. Miller Chairman of the Board and Chief Executive Officer; formerly, Senior
Vice Chairman, Chase Manhattan Corp., 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.
</TABLE>
<TABLE>
<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 Companies 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 Corporate Actuary; formerly, 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.
SAI-24
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
The financial statements of Equitable Life included in this Statement of
Additional Information should be considered only as bearing upon the ability of
Equitable Life to meet its obligations under the group annuity contract. They
should not be considered as bearing upon the investment experience of the
Funds. The financial statements of Separate Account Nos. 4 (Pooled), 30
(Pooled), 191 and 200 reflect applicable fees, charges and other expenses under
the Program as in effect during the periods covered and they also reflect the
charges against the accounts made in accordance with the terms of all other
contracts participating in the respective separate accounts. The financial
statements of Separate Account No. 8 (Prime Property Fund) reflect charges
against the account made in accordance with the terms of all other contracts
participating in the account, there are no Program fees charged against
Separate Account No. 8.
<TABLE>
<S> <C>
SEPARATE ACCOUNT NO. 4 (POOLED):
Report of Independent Accountants .................................................... SAI-26
Separate Account No. 4 (Pooled) (The Growth Equity Fund):
Statement of Assets and Liabilities, December 31, 1998 ............................... SAI-27
Statements of Operations and Changes in Net Assets for the Years Ended December 31, SAI-28
1998 and 1997
Portfolio of Investments, December 31, 1998 .......................................... SAI-29
Notes to Financial Statements ........................................................ SAI-34
SEPARATE ACCOUNT NOS. 191 AND 200:
Report of Independent Accountants .................................................... SAI-37
Separate Account No. 191 (The ADA Foreign Fund):
Statement of Assets and Liabilities, December 31, 1998 ............................... SAI-38
Statement of Operations and Changes in Net Assets for the Years Ended December 31, SAI-39
1998 and 1997
Separate Account No. 200 (The Aggressive Equity Fund):
Statement of Assets and Liabilities, December 31, 1998 ............................... SAI-40
Statements of Operations and Changes in Net Assets, for the Years Ended December 31, SAI-41
1998 and 1997
Separate Account Nos. 191 and 200:
Notes to Financial Statements ........................................................ SAI-42
SEPARATE ACCOUNT NO. 30 (POOLED) (THE REAL ESTATE FUND):
Report of Independent Accountants .................................................... SAI-43
Statements of Assets and Liabilities, December 31, 1998 and 1997 ..................... SAI-44
Statements of Operations and Changes in Net Assets for the Years Ended December 31, SAI-45
1998 and 1997
Statements of Cash Flows for the Years Ended December 31, 1998 and 1997 .............. SAI-46
Notes to Financial Statements ........................................................ SAI-47
SEPARATE ACCOUNT NO. 8 (PRIME PROPERTY FUND):
Report of Independent Accountants .................................................... SAI-49
Statement of Independent Appraisers .................................................. SAI-50
Statements of Assets and Liabilities, December 31, 1998 and 1997 ..................... SAI-51
Statements of Operations and Changes in Net Assets for the Years Ended December 31, SAI-52
1998 and 1997
Statements of Cash Flows for the Years Ended December 31, 1998 and 1997 .............. SAI-53
Notes to Financial Statements ........................................................ SAI-54
Schedule X: Supplementary Income Statement Information, December 31, 1998 and 1997 ... SAI-63
Schedule XII: Mortgage Loans Receivable on Real Estate, December 31, 1998 and 1997 ... SAI-64
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES:
Report of Independent Accountants .................................................... SAI-67
Consolidated Balance Sheets, December 31, 1998 and 1997 .............................. SAI-68
Consolidated Statements of Earnings for the Years Ended December 31, 1998, 1997 and SAI-69
1996
Consolidated Statements of Shareholder's Equity for the Years Ended December 31, SAI-70
1998, 1997 and 1996
Consolidated Statements of Cash Flows for the Years Ended December 31, 1998, 1997 and SAI-71
1996
Notes to Consolidated Financial Statements ........................................... SAI-72
</TABLE>
SAI-25
<PAGE>
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
The Equitable Life Assurance Society of the United States
and the Contractowners of Separate Account No. 4
of The Equitable Life Assurance Society of the United States
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and
changes in net assets and the selected per unit data (included under Condensed
Financial Information in the prospectus of American Dental Association Members
Retirement Program) present fairly, in all material respects, the financial
position of Separate Account No. 4 (Pooled) (The Growth Equity Fund) of The
Equitable Life Assurance Society of the United States ("Equitable Life") at
December 31, 1998, its results of operations and 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, 1998 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
PricewaterhouseCoopers LLP
New York, New York
February 8, 1999
SAI-26
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO.4 (POOLED)
(THE ALLIANCE GROWTH EQUITY FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statement of Assets and Liabilities
December 31, 1998
- -------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments (Notes 2 and 3):
Common stocks -- at market value (cost: $1,914,414,699) ................................. $2,098,464,735
Preferred stocks -- at market value (cost: $841,125) .................................... 934,875
Participation in Separate Account No.2A -- at amortized cost, which approximates market
value, equivalent to 8,358
units at $285.54 ....................................................................... 2,386,642
Receivables:
Securities sold ......................................................................... 22,404,246
Dividends ............................................................................... 1,027,478
- -------------------------------------------------------------------------------------------------------------
Total assets ........................................................................... 2,125,217,976
- -------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payables:
Securities purchased .................................................................... 3,784,147
Due to Equitable Life's General Account ................................................. 7,913,160
Custodian fee payable ................................................................... 27,461
Investment management fees payable ...................................................... 5,210
Accrued expenses ......................................................................... 440,812
Amount retained by Equitable Life in Separate Account No. 4 (Note 1) ..................... 1,271,958
- -------------------------------------------------------------------------------------------------------------
Total liabilities ...................................................................... 13,442,748
- -------------------------------------------------------------------------------------------------------------
NET ASSETS (NOTE 1):
Net assets attributable to participants' accumulations ................................... 2,072,991,897
Reserves and other liabilities attributable to annuity benefits .......................... 38,783,331
- -------------------------------------------------------------------------------------------------------------
NET ASSETS ............................................................................... $2,111,775,228
=============================================================================================================
</TABLE>
See Notes to Financial Statements.
SAI-27
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 4 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statements of Operations and Changes in Net Assets
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
1998 1997
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
FROM OPERATIONS:
INVESTMENT INCOME (NOTE 2):
Dividends (net of foreign taxes withheld -- 1998: $199,170 and 1997: $2,138) ............. $ 12,224,979 $ 13,385,197
Interest ................................................................................. 477,732 845,517
- --------------------------------------------------------------------------------------------------------------------------------
Total .................................................................................... 12,702,711 14,230,714
EXPENSES (NOTE 4) ........................................................................ (18,036,108) (19,783,932)
- --------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT LOSS ...................................................................... (5,333,397) (5,553,218)
- --------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 2):
Realized gain from security and foreign currency transactions ............................ 424,897,105 372,430,956
- --------------------------------------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investments and foreign currency transactions:
Beginning of year ....................................................................... 690,125,231 448,580,808
End of year ............................................................................. 184,143,786 690,125,231
- --------------------------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation/depreciation ........................................... (505,981,445) 241,544,423
- --------------------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS ................................... (81,084,340) 613,975,379
- --------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets attributable to operations ............................. (86,417,737) 608,422,161
- --------------------------------------------------------------------------------------------------------------------------------
FROM CONTRIBUTIONS AND WITHDRAWALS:
Contributions ............................................................................ 451,738,195 546,890,479
Withdrawals .............................................................................. (897,373,357) (969,496,108)
- --------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets attributable to contributions and withdrawals ..................... (445,635,162) (422,605,629)
- --------------------------------------------------------------------------------------------------------------------------------
(Increase) in accumulated amount retained by Equitable Life in Separate Account No. 4
(Note 1) ................................................................................ (153,300) (360,863)
- --------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS ........................................................ (532,206,199) 185,455,669
NET ASSETS -- BEGINNING OF YEAR .......................................................... 2,643,981,427 2,458,525,758
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSETS -- END OF YEAR ................................................................ $2,111,775,228 $2,643,981,427
==============================================================================================================================
</TABLE>
See Notes to Financial Statements.
SAI-28
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 4 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
NUMBER OF MARKET
SHARES VALUE
- -------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS:
BASIC MATERIALS
CHEMICALS -- SPECIALTY (0.1%)
Crompton & Knowles Corp. ............................ 97,800 $ 2,023,238
------------
TOTAL BASIC MATERIALS (0.1%) ........................ 2,023,238
------------
BUSINESS SERVICES
ENVIRONMENTAL CONTROL (3.2%)
United States Filter Corp. * ........................ 3,000,000 68,625,000
------------
PRINTING, PUBLISHING & BROADCASTING (1.6%)
CBS Corp. ........................................... 1,000,000 32,750,000
------------
PROFESSIONAL SERVICES (0.1%)
Nielsen Media Research, Inc. ........................ 163,100 2,935,800
------------
TRUCKING, SHIPPING (0.2%)
Knightsbridge Tankers Ltd. .......................... 150,000 3,121,875
Marine Transport Corp. * ............................ 50,000 112,500
OMI Corp. * ......................................... 500,000 1,625,000
------------
4,859,375
------------
TOTAL BUSINESS SERVICES (5.1%) ...................... 109,170,175
------------
CAPITAL GOODS
AEROSPACE (0.2%)
Loral Space & Communications Ltd. * ................. 250,000 4,453,125
------------
TOTAL CAPITAL GOODS (0.2%) .......................... 4,453,125
------------
CONSUMER CYCLICALS
AIRLINES (8.6%)
Alaska Air Group, Inc. * ............................ 200,000 8,850,000
America West Holdings Corp. (Class B) * ............. 350,000 5,950,000
Continental Airlines, Inc. (Class B) * .............. 3,399,997 113,899,900
Northwest Airlines Corp. (Class A) * ................ 2,100,000 53,681,250
------------
182,381,150
------------
APPAREL, TEXTILE (2.2%)
Nautica Enterprises, Inc. * ......................... 114,200 1,713,000
Tommy Hilfiger Corp. * .............................. 650,000 39,000,000
Unifi, Inc. ......................................... 200,000 3,912,500
Wolverine World Wide, Inc. .......................... 154,600 2,048,450
------------
46,673,950
------------
AUTO RELATED (7.7%)
Budget Group, Inc. * ................................ 250,000 3,968,750
Circuit City Stores, Inc. -- CarMax Group * ......... 490,200 2,665,462
Dana Corp. .......................................... 300,000 12,262,500
</TABLE>
SAI-29
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 4 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- (Continued)
December 31, 1998
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
NUMBER OF MARKET
SHARES VALUE
- -------------------------------------------------------------------------------------
<S> <C> <C>
Dollar Thrifty Automotive Group, Inc. * ......... 841,700 $ 10,836,887
Republic Industries, Inc. * ..................... 9,000,000 132,750,000
------------
162,483,599
------------
FOOD SERVICES, LODGING (0.9%)
Extended Stay America, Inc. * ................... 1,660,000 17,430,000
Suburban Lodges of America, Inc. * .............. 35,000 286,563
------------
17,716,563
------------
HOUSEHOLD FURNITURE, APPLIANCES (1.6%)
Industrie Natuzzi Spa (ADR) ..................... 1,011,000 25,148,625
Newell Co. ...................................... 200,000 8,250,000
------------
33,398,625
------------
LEISURE RELATED (9.0%)
Carnival Corp. .................................. 2,000,000 96,000,000
Cendant Corporation * ........................... 506,000 9,645,625
Mirage Resorts, Inc. * .......................... 707,600 10,569,771
Royal Caribbean Cruises Ltd. .................... 2,000,000 74,000,000
------------
190,215,396
------------
RETAIL -- GENERAL (1.0%)
Circuit City Stores-Circuit City Group .......... 76,500 3,820,219
Dickson Concepts International, Inc. ............ 357,000 276,473
Genesis Direct, Inc. * .......................... 215,000 1,679,688
Limited, Inc. ................................... 100,000 2,912,500
Tandy Corp. ..................................... 50,000 2,059,375
Tiffany & Co. ................................... 200,000 10,375,000
------------
21,123,255
------------
TOTAL CONSUMER CYCLICALS (31.0%) ................ 653,992,538
------------
CONSUMER NONCYCLICALS
DRUGS (2.5%)
Geltex Pharmaceuticals, Inc. * .................. 700,000 15,837,500
MedImmune, Inc. * ............................... 361,600 35,956,600
------------
51,794,100
------------
FOODS (0.3%)
Tysons Foods, Inc. .............................. 350,000 7,437,500
------------
HOSPITAL SUPPLIES & SERVICES (1.3%)
HEALTHSOUTH Corp. * ............................. 1,800,000 27,787,500
------------
TOTAL CONSUMER NONCYCLICALS (4.1%) .............. 87,019,100
------------
</TABLE>
SAI-30
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 4 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- (Continued)
December 31, 1998
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
NUMBER OF MARKET
SHARES VALUE
- -------------------------------------------------------------------------------------
<S> <C> <C>
CREDIT-SENSITIVE
BANKS (0.8%)
Citigroup, Inc. ......................................... 300,000 $ 14,850,000
Washington Mutual, Inc. ................................. 84,000 3,207,750
------------
18,057,750
------------
FINANCIAL SERVICES (13.8%)
Edwards (A.G.), Inc. .................................... 760,000 28,310,000
Legg Mason, Inc. ........................................ 2,500,000 78,906,250
MBNA Corp. .............................................. 6,900,000 172,068,750
Newcourt Credit Group, Inc. ............................. 100,000 3,493,750
PMI Group, Inc. ......................................... 200,000 9,875,000
------------
292,653,750
------------
INSURANCE (8.9%)
Ace Ltd. ................................................ 100,000 3,443,750
CNA Financial Corp. * ................................... 3,530,100 142,086,525
IPC Holdings Ltd. ....................................... 207,400 4,809,088
NAC Re Corp. ............................................ 600,000 28,162,500
Travelers Property Casualty (Class A) ................... 300,000 9,300,000
------------
187,801,863
------------
REAL ESTATE (0.1%)
Excel Legacy Corp. * .................................... 140,000 560,000
Prime Retail, Inc. ...................................... 60,000 588,750
------------
1,148,750
------------
UTILITY -- ELECTRIC (0.1%)
AES Corp. * ............................................. 30,000 1,421,250
------------
UTILITY -- TELEPHONE (7.0%)
Embratel Participacoes (ADR) * .......................... 220,000 3,066,250
Tele Celular Sul Participacoes (ADR) * .................. 22,000 383,625
Tele Centro Oeste Celular Participacoes (ADR) * ......... 73,333 215,416
Tele Centro Sul Participacoes (ADR) * ................... 44,000 1,839,750
Tele Leste Celular Participacoes (ADR) * ................ 4,400 124,850
Telemig Celular Participacoes (ADR) * ................... 11,000 233,750
Tele Nordeste Celular Participacoes (ADR) * ............. 11,000 203,500
Tele Norte Celular Participacoes (ADR) * ................ 4,400 99,275
Tele Norte Leste Participacoes (ADR) * .................. 220,000 2,736,250
Telephone & Data Systems, Inc. .......................... 2,930,000 131,666,875
Telesp Celular Participacoes (ADR) * .................... 88,000 1,540,000
Telesp Participacoes S.A. (ADR) * ....................... 220,000 4,867,500
Tele Sudeste Celular Participacoes (ADR) * .............. 44,000 910,250
------------
147,887,291
------------
TOTAL CREDIT-SENSITIVE (30.7%) .......................... $648,970,654
------------
</TABLE>
SAI-31
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 4 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- (Continued)
December 31, 1998
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
NUMBER OF MARKET
SHARES VALUE
- -----------------------------------------------------------------------------------------
<S> <C> <C>
ENERGY
OIL -- DOMESTIC (0.4%)
Kerr McGee Corp. .......................................... 220,000 $ 8,415,000
------------
OIL -- INTERNATIONAL (0.1%)
IRI International Corporation * ........................... 305,000 1,220,000
------------
OIL -- SUPPLIES & CONSTRUCTION (4.9%)
BJ Services Co. * ......................................... 440,000 6,875,000
Halliburton Co. ........................................... 1,000,000 29,625,000
Lukoil Holdings -- Spons (ADR) ............................ 15,000 232,520
Lukoil Holdings -- Spons (ADR) (Preferred Shares) ......... 40,000 134,684
Noble Drilling Corp. * .................................... 2,200,000 28,462,500
Oceaneering International, Inc. * ......................... 300,000 4,500,000
Parker Drilling Corp. * ................................... 3,756,100 11,972,569
Rowan Cos., Inc. * ........................................ 1,684,800 16,848,000
Stolt Comex Seaway S.A. * ................................. 14,000 94,500
Stolt Comex Seaway S.A. (ADR) (Class A) * ................. 880,000 4,950,000
------------
103,694,773
------------
TOTAL ENERGY (5.4%) ....................................... 113,329,773
------------
TECHNOLOGY
ELECTRONICS (8.8%)
Altera Corp. * ............................................ 460,000 28,002,500
Cisco Systems, Inc. * ..................................... 400,000 37,125,000
DBT Online, Inc. * ........................................ 160,000 3,990,000
Micron Technology, Inc. * ................................. 300,000 15,168,750
Motorola, Inc. ............................................ 50,000 3,053,125
Network Associates, Inc. * ................................ 550,000 36,437,500
Sanmina Corp. * ........................................... 305,600 19,100,000
Sterling Commerce, Inc. * ................................. 250,000 11,250,000
Xilinx, Inc. * ............................................ 479,300 31,214,413
------------
185,341,288
------------
OFFICE EQUIPMENT SERVICES (3.4%)
First Data Corp. .......................................... 600,000 19,012,500
HBO & Co. ................................................. 1,752,500 50,274,844
Novell, Inc. * ............................................ 100,000 1,812,500
------------
71,099,844
------------
TELECOMMUNICATIONS (10.6%)
American Satellite Network -- Rights * .................... 70,000 0
Esprit Telecom Group PLC (ADR) * .......................... 50,000 2,337,500
Global TeleSystems Group, Inc. * .......................... 1,290,000 71,917,500
</TABLE>
SAI-32
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 4 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- (Concluded)
December 31, 1998
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
NUMBER OF MARKET
SHARES VALUE
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Millicom International Cellular S.A. * .................................. 1,550,000 $ 54,056,250
NTL Incorporated * ...................................................... 100,000 5,643,750
United States Cellular Corp. * .......................................... 2,345,000 89,110,000
--------------
223,065,000
--------------
TOTAL TECHNOLOGY (22.8%) ................................................ 479,506,132
--------------
TOTAL COMMON STOCKS (99.4%)
(Cost $1,914,414,699)................................................... 2,098,464,735
--------------
PREFERRED STOCKS:
CONSUMER CYCLICALS
AIRLINES (0.0%)
Continental Airlines Financial Trust
8.5% Conv. ............................................................. 13,500 934,875
--------------
TOTAL CONSUMER CYCLICALS (0.0%) ......................................... 934,875
--------------
TOTAL PREFERRED STOCKS (0.0%)
(Cost $841,125)......................................................... 934,875
--------------
PARTICIPATION IN SEPARATE ACCOUNT NO. 2A,
at amortized cost, which approximates
market value, equivalent to 8,358 units
at $285.54 each (0.1%).................................................. 2,386,642
--------------
TOTAL INVESTMENTS (99.5%)
(Cost $1,917,642,466)................................................... 2,101,786,252
OTHER ASSETS LESS LIABILITIES (0.5%) .................................... 11,260,934
AMOUNTS RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT NO. 4 (0.0%) (NOTE 1) ................................. (1,271,958)
--------------
NET ASSETS (100.0%) ..................................................... $2,111,775,228
==============
Reserves attributable to participants' accumulations .................... 2,072,991,897
Reserves and other contract liabilities attributable to annuity benefits 38,783,331
--------------
NET ASSETS .............................................................. $2,111,775,228
==============
</TABLE>
- ----------
* Non-income producing.
See Notes to Financial Statements.
SAI-33
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 4 (POOLED)
of The Equitable Life Assurance Society of the United States
Notes to Financial Statements
1. Separate Account No. 4 (Pooled) (the Alliance Growth Equity Fund) (the Fund)
of The Equitable Life Assurance Society of the United States (Equitable
Life), a wholly-owned subsidiary of The Equitable Life Companies
Incorporated, was established in conformity with the New York State
Insurance Law. Pursuant to such law, to the extent provided in the
applicable contracts, the net assets in the Fund are not chargeable with
liabilities arising out of any other business of Equitable Life. The
excess of assets over reserves and other contract liabilities amounting to
$1,271,958 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 Separate Account No. 4. The American Dental Association
Members Retirement Program is one of the many contract owners
participating in this Fund.
Interests of retirement and investment plans for Equitable Life employees,
managers, and agents in Separate Account No. 4 aggregated $323,953,589
(15.3%), at December 31, 1998 and $384,471,790 (14.5%), at December 31,
1997, of the net assets in the Fund.
Equitable Life is the investment manager for the Fund. Alliance Capital
Management L.P. (Alliance) serves as the investment adviser to Equitable
Life with respect to the management of the Fund. Alliance is a
publicly-traded limited partnership which is indirectly majority-owned by
Equitable Life.
Equitable Life and Alliance seek to obtain the best price and execution of
all orders placed for the Fund considering all circumstances. In addition
to using brokers and dealers to execute portfolio security transactions for
accounts under their management, Equitable Life and Alliance may also enter
into other types of business and securities transactions with brokers and
dealers, which will be unrelated to allocation of the Fund's portfolio
transactions.
The accompanying financial statements are prepared in conformity with
generally accepted accounting principles (GAAP). The preparation of
financial statements in conformity with GAAP requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
2. Security transactions are recorded on the trade date. Amortized cost of debt
securities consists of cost adjusted, where applicable, for amortization
of premium or accretion of discount. Dividend income is recorded on the
ex-dividend date; interest income (including amortization of premium and
discount on securities using the effective yield method) is accrued daily.
Realized gains and losses on the sale of investments are computed on the
basis of the identified cost of the related investments sold.
Transactions denominated in foreign currencies are recorded at the rate
prevailing at the date of such transactions. Asset and liability accounts
that are denominated in a foreign currency are adjusted to reflect the
current exchange rate at the end of the period. Transaction gains or losses
resulting from changes in the exchange rate during the reporting period or
upon settlement of the foreign currency transactions are reflected under
"Realized and Unrealized Gain (Loss) on Investments" in the Statements of
Operations and Changes in Net Assets.
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
SAI-34
<PAGE>
- --------------------------------------------------------------------------------
(Participating Funds) under Equitable Life's management. Separate Account
No. 2A invests in debt securities maturing in sixty days or less from the
date of acquisition. At December 31, 1998, the amortized cost of
investments held in Separate Account No. 2A consist of the following:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
AMORTIZED COST %
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Commercial Paper, 5.10% - 5.35% due 01/04/99 through 02/18/99 $ 230,335,099 97.7%
U.S. Government Agency, 4.28% due 01/04/99 ................... 5,198,145 2.2
- ---------------------------------------------------------------------------------------------
Total Investments ............................................ 235,533,244 99.9
Other Assets less Liabilities ................................ 215,649 0.1
- ---------------------------------------------------------------------------------------------
Net Assets of Separate Account No. 2A ........................ $ 235,748,893 100.0%
=============================================================================================
Units Outstanding ............................................ 825,639
Unit Value ................................................... $ 285.54
- ---------------------------------------------------------------------------------------------
</TABLE>
Participating Funds purchase or redeem units depending on each participating
account's excess cash availability or cash needs to meet its liabilities.
Separate Account No. 2A is not subject to investment management fees. Separate
Account No. 2A is valued daily at amortized cost, which approximates market
value.
For 1998 and 1997, investment security transactions, excluding short-term debt
securities, were as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
COST OF NET PROCEEDS
PURCHASES OF SALES
- --------------------------------------------------------------------------------------
Stocks and long-term corporate debt securities:
<S> <C> <C>
1998 ........................................ $1,692,067,102 $2,151,023,546
1997 ........................................ 1,569,991,103 1,988,739,298
U.S. Government obligations:
1998 ........................................ -- --
1997 ........................................ -- --
- ------------------------------------------------- -------------- --------------
</TABLE>
3. Investment securities are valued as follows:
Stocks listed on national securities exchanges and certain over-the-counter
issues traded on the National Association of Securities Dealers, Inc.
Automated Quotation (NASDAQ) national market system are valued at the last
sale price, or, if no sale, at the latest available bid price.
Foreign securities not traded directly, or in American Depository Receipt
(ADR) form in the United States, are valued at the last sale price in the
local currency on an exchange in the country of origin. Foreign currency is
converted into its U.S. dollar equivalent at current exchange rates.
United States Treasury securities and other obligations issued or
guaranteed by the United States Government, its agencies or
instrumentalities are valued at representative quoted prices.
Long-term publicly traded corporate bonds are valued at prices obtained
from a bond pricing service of a major dealer in bonds when such prices are
available; however, in circumstances where Equitable Life and Alliance deem
it appropriate to do so, an over-the-counter or exchange quotation may be
used.
Convertible preferred stocks listed on national securities exchanges are
valued at their last sale price or, if there is no sale, at the latest
available bid price.
Convertible bonds and unlisted convertible preferred stock are valued at
bid prices obtained from one or more
SAI-35
<PAGE>
- --------------------------------------------------------------------------------
major dealers in such securities; where there is a discrepancy between
dealers, values may be adjusted based on recent premium spreads to the
underlying common stock.
Other assets that do not have a readily available market price are valued
at fair value as determined in good faith by Equitable Life's Investment
officers.
Separate Account No. 2A is valued daily at amortized cost, which
approximates market value. Short-term debt securities purchased directly by
the Funds which mature in 60 days or less are valued at amortized cost.
Short-term debt securities which mature in more than 60 days are valued at
representative quoted prices.
4. Charges and fees are deducted in accordance with the terms of the various
contracts which participate in the Fund. With respect to the American
Dental Association Members Retirement Program, these expenses consist of
investment management and accounting fees, program expense charge, direct
expenses and record maintenance and report fees. These charges and fees
are paid to Equitable Life by the Fund and are recorded as expenses in the
accompanying Statements of Operations and Changes in Net Assets.
5. No Federal income tax based on net income or realized and unrealized capital
gains was applicable to contracts participating in the Fund for the two
years ended December 31, 1998, by reason of applicable provisions of the
Internal Revenue Code and no Federal income tax payable by Equitable Life
for such years will affect such contracts. Accordingly, no Federal income
tax provision is required.
SAI-36
<PAGE>
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
The Equitable Life Assurance Society of the United States
and the Contractowners of Separate Account Nos. 191 and 200
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 American Dental Association Members Retirement Program) present fairly, in
all material respects, the financial position of Separate Account Nos. 191 (The
ADA Foreign Fund) and 200 (The Aggressive Equity Fund) of The Equitable Life
Assurance Society of the United States ("Equitable Life") at December 31, 1998
and each of their results of operations, changes in net assets 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 shares owned in the underlying mutual
funds with the transfer agents at December 31, 1998, provide a reasonable basis
for the opinion expressed above.
PricewaterhouseCoopers LLP
New York, New York
February 8, 1999
SAI-37
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 191 (THE ADA FOREIGN FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statement of Assets and Liabilities
December 31, 1998
<TABLE>
<S> <C>
- ---------------------------------------------------------------------------------------------------------
ASSETS:
Investments in 8,630,307 shares of The Templeton Foreign Fund-at value (cost: $72,408,277
$85,393,687) (Notes 2 and 5)
Receivable from Equitable Life's General Account ......................................... 22,652
- ---------------------------------------------------------------------------------------------------------
Total assets ............................................................................ 72,430,929
- ---------------------------------------------------------------------------------------------------------
LIABILITIES:
Accrued expenses ......................................................................... 21,739
- ---------------------------------------------------------------------------------------------------------
NET ASSETS ............................................................................... $72,409,190
=========================================================================================================
</TABLE>
See Notes to Financial Statements.
SAI-38
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 191
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statements of Operations and Changes in Net Assets
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
1998 1997
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
FROM OPERATIONS:
INVESTMENT INCOME (NOTE 2):
Dividends from The Templeton Foreign Fund ....................................... $ 2,885,583 $ 3,560,402
EXPENSES (NOTE 3) ............................................................... (617,996) (728,241)
- ----------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME ........................................................... 2,267,587 2,832,161
- ----------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 2):
Realized gain from share transactions ........................................... 144,211 2,744,671
Realized gain distribution from The Templeton Foreign Fund ...................... 5,217,767 6,676,061
- ----------------------------------------------------------------------------------------------------------------------
Net realized gain ............................................................... 5,361,978 9,420,732
- ----------------------------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investments:
Beginning of year .............................................................. (666,878) 6,356,719
End of year .................................................................... (12,985,410) (666,878)
- ----------------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation/depreciation .................................. (12,318,532) (7,023,597)
- ----------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS .......................... (6,956,554) 2,397,135
- ----------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets attributable to operations .................... (4,688,967) 5,229,296
- ----------------------------------------------------------------------------------------------------------------------
FROM CONTRIBUTIONS AND WITHDRAWALS:
Contributions ................................................................... 26,640,883 38,090,547
Withdrawals ..................................................................... (40,991,665) (36,262,553)
- ----------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets attributable to contributions and withdrawals . (14,350,782) 1,827,994
- ----------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS ............................................... (19,039,749) 7,057,290
NET ASSETS -- BEGINNING OF YEAR ................................................. 91,448,939 84,391,649
- ----------------------------------------------------------------------------------------------------------------------
NET ASSETS -- END OF YEAR ....................................................... $ 72,409,190 $ 91,448,939
======================================================================================================================
</TABLE>
See Notes to Financial Statements.
SAI-39
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 200 (THE AGGRESSIVE EQUITY FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statement of Assets and Liabilities
December 31, 1998
<TABLE>
<S> <C>
ASSETS:
Investments in 3,781,973 shares of The MFS Emerging Growth Fund-at value (cost: $168,676,010
$127,905,830) (Notes 2 and 5)
- -----------------------------------------------------------------------------------------------------------
LIABILITIES:
Due to Equitable Life's General Account .................................................. 86,873
Accrued expenses ......................................................................... 53,401
- ----------------------------------------------------------------------------------------------------------
Total liabilities ...................................................................... 140,274
- -----------------------------------------------------------------------------------------------------------
NET ASSETS ............................................................................... $168,535,736
===========================================================================================================
</TABLE>
See Notes to Financial Statements.
SAI-40
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 200
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statements of Operations and Changes in Net Assets
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
1998 1997
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
FROM OPERATIONS:
INVESTMENT INCOME (NOTE 2):
Dividends from The MFS Emerging Growth Fund) ............................. $ -- $ 284,428
EXPENSES (NOTE 3) ........................................................ (1,051,546) (917,559)
- ----------------------------------------------------------------------------------------------------------------
NET INVESTMENT LOSS ...................................................... (1,051,546) (633,131)
- ----------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 2):
Realized Gain from share transactions .................................... 11,884,764 6,567,717
Realized Gain Distribution from MFS Emerging Growth Fund ................. 1,516,183 957,567
- ----------------------------------------------------------------------------------------------------------------
Net realized gain ........................................................ 13,400,947 7,525,284
- ----------------------------------------------------------------------------------------------------------------
Unrealized Appreciation (depreciation) of investments:
Beginning of year ....................................................... 22,776,991 8,095,974
End of year ............................................................. 40,770,180 22,776,991
- ----------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation/depreciation of investments ............ 17,993,189 14,681,017
- ----------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS .......................... 31,394,136 22,206,301
- ----------------------------------------------------------------------------------------------------------------
Increase in net assets attributable to operations ........................ 30,342,590 21,573,170
- ----------------------------------------------------------------------------------------------------------------
FROM CONTRIBUTIONS AND WITHDRAWALS:
Contributions ............................................................ 74,479,930 60,381,603
Withdrawals .............................................................. (69,570,667) (57,127,117)
- ----------------------------------------------------------------------------------------------------------------
Increase in net assets attributable to contributions and withdrawals ..... 4,909,263 3,254,486
- ----------------------------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS ................................................... 35,251,853 24,827,656
NET ASSETS -- BEGINNING OF YEAR .......................................... 133,283,883 108,456,227
- ----------------------------------------------------------------------------------------------------------------
NET ASSETS -- END OF YEAR ................................................ $ 168,535,736 $ 133,283,883
================================================================================================================
</TABLE>
See Notes to Financial Statements.
SAI-41
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NOS. 191 AND 200
of The Equitable Life Assurance Society of the United States Notes to Financial
Statements
1. Separate Account Nos. 191 (the ADA Foreign Fund) and 200 (the Aggressive
Equity Fund) (the Funds) of The Equitable Life Assurance Society of the
United States (Equitable Life), a wholly-owned subsidiary of The Equitable
Companies Incorporated, were established in conformity with the New York
State Insurance Law. Pursuant to such law, to the extent provided in the
applicable contracts, the net assets in the Funds are not chargeable with
liabilities arising out of any other business of Equitable Life.
Equitable Life is the investment manager for the Funds.
The accompanying financial statements are prepared in conformity with
generally accepted accounting principles (GAAP). The preparation of
financial statements in conformity with GAAP requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
Separate Account No. 191 invests 100% of its assets in shares of the
Templeton Foreign Fund, a series of Templeton Funds, Inc., which is
registered under the Investment Company Act of 1940 as an open-end
management investment company. The investment manager of the Templeton
Foreign Fund is Templeton Global Advisors Ltd., an indirect wholly-owned
subsidiary of Franklin Resources, Inc.
Separate Account No. 200 invests 100% of its assets in Class A shares of
the MFS Emerging Growth Fund, a series of MFS Series Trust II, which was
organized as a Massachusetts business trust and is registered under the
1940 Act as an open-end management investment company. The investment
adviser of the MFS Emerging Growth Fund is Massachusetts Financial
Services.
2. Realized gains and losses on investments include gains and losses on
redemptions of the underlying fund's shares (determined on the identified
cost basis) and capital gain distributions from the underlying funds.
Dividends and realized gain distributions from underlying funds are
recorded on ex-date.
Investments in the Templeton Foreign Fund and MFS Emerging Growth Fund are
valued at the underlying mutual fund's net asset value per share.
3. Charges and fees relating to the Funds are deducted in accordance with the
terms of the contracts issued by Equitable Life to the Trusts. With
respect to the American Dental Association Members Retirement Program,
these expenses consist of program expense charges, direct expenses and
record maintenance and report fees. These charges and fees are paid to
Equitable Life by the Funds and are recorded as expenses in the
accompanying Statements of Operations and Changes in Net Assets.
4. No Federal income tax was applicable to contracts participating in the
Funds, by reason of applicable provisions of the Internal Revenue Code and
no Federal Income tax payable by Equitable Life will affect such
contracts. Accordingly, no Federal income tax provision is required.
SAI-42
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 30 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Report of Independent Accountants
The Equitable Life Assurance Society of the United States:
In our opinion, the accompanying statements of assets and liabilities and the
related statements of operations and changes in net assets and of cash flows
present fairly, in all material respects, the financial position of Separate
Account No. 30 of The Equitable Life Assurance Society of the United States
(the Account) as of December 31, 1998 and 1997, and the results of its
operations and its cash flows for the years then ended, in conformity with
generally accepted accounting principles. These financial statements are the
responsibility of the Account's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The selected per unit information
(appearing under "Condensed Finanical Information" in the Prospectus) is
presented for the purpose of satisfying regulatory reporting requirements and
is not a required part of the basic financial statements. Such selected per
unit information has been subjected to the auditing procedures applied in the
audit of the basic financial statements and, in our opinion, is fairly stated,
in all material respects in relation to the financial statements taken as
a whole.
PricewaterhouseCoopers LLP
Atlanta, Georgia
February 12, 1999
SAI-43
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 30 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statements of Assets and Liabilities
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
DECEMBER 31,
1998 1997
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS:
Investments (Notes 2 and 3):
Participation in Prime Property Fund at value, equivalent to 1,021 units at $8,444.24 for
1998 (cost: $5,253,222) and 1,019 units at $7,110.90 for 1997 (cost: $5,061,099) ....... $8,618,436 $7,242,580
Participation in Separate Account No. 2A, at amortized cost which approximates market
value, equivalent to 3,862 units at $285.54 for 1998 and 4,327 units at $270.27 for
1997 ................................................................................... 1,102,846 1,169,370
Cash ..................................................................................... 31,104 33,289
- ---------------------------------------------------------------------------------------------------------------------------
Total Assets ............................................................................ 9,752,386 8,445,239
- ---------------------------------------------------------------------------------------------------------------------------
LIABILITIES:
Accrued expenses ......................................................................... 16,233 23,669
- ---------------------------------------------------------------------------------------------------------------------------
Total Liabilities ....................................................................... 16,233 23,669
- ---------------------------------------------------------------------------------------------------------------------------
NET ASSETS ............................................................................... $9,736,153 $8,421,570
===========================================================================================================================
</TABLE>
See Notes to Financial Statements.
SAI-44
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 30 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statements of Operations and Changes in Net Assets
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
1998 1997
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
FROM OPERATIONS:
Investment Income (Note 2):
Interest income .............................................................. $ 48,476 $ 74,636
Expenses (Note 4) ............................................................ (170,394) (170,738)
- -------------------------------------------------------------------------------------------------------------------
Net Investment Loss .......................................................... (121,918) (96,102)
- -------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain on Investments (Note 2):
Realized gain from redemption of Prime Property Fund units .................. 192,123 143,631
Unrealized appreciation of Prime Property Fund Units: ........................
January 1 ................................................................... 2,181,481 1,395,484
December 31 ................................................................. 3,365,214 2,181,481
- -------------------------------------------------------------------------------------------------------------------
Unrealized appreciation ...................................................... 1,183,733 785,997
Net Realized and Unrealized Gain on Investments .............................. 1,375,856 929,628
- -------------------------------------------------------------------------------------------------------------------
Increase in net assets attributable to operations ............................ 1,253,938 833,526
- -------------------------------------------------------------------------------------------------------------------
FROM ALLOCATIONS AND WITHDRAWALS:
Allocations .................................................................. 1,317,853 643,214
Withdrawals .................................................................. (1,257,208) (1,511,541)
- -------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets attributable to allocations and withdrawals 60,645 (868,327)
- -------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS ............................................ 1,314,583 (34,801)
NET ASSETS -- JANUARY 1 ...................................................... 8,421,570 8,456,371
- -------------------------------------------------------------------------------------------------------------------
NET ASSETS -- DECEMBER 31 .................................................... $ 9,736,153 $ 8,421,570
===================================================================================================================
</TABLE>
See Notes to Financial Statements.
SAI-45
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 30 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statements of Cash Flows
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
1998 1997
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net Investment Loss ...................................................................... $ (121,918) $ (96,102)
- ----------------------------------------------------------------------------------------------------------------------------
Adjustments to reconcile net investment loss to net cash flow used in operating
activities:
Increase (decrease) in accrued expenses ................................................. (7,436) 1,975
- ----------------------------------------------------------------------------------------------------------------------------
Total adjustments ....................................................................... (7,436) 1,975
- ----------------------------------------------------------------------------------------------------------------------------
Net cash flow used in operating activities .............................................. (129,354) (94,127)
- ----------------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES:
Purchase of Units -- Prime Property Fund ................................................ (500,000) --
Redemption of units -- Prime Property Fund .............................................. 500,000 550,000
- ----------------------------------------------------------------------------------------------------------------------------
Net cash flow provided by investing activities .......................................... -- 550,000
- ----------------------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES:
Allocations ............................................................................. 1,317,853 643,214
Withdrawals ............................................................................. (1,257,208) (1,511,541)
- ----------------------------------------------------------------------------------------------------------------------------
Net cash flow provided by (used in) financing activities ................................ 60,645 (868,327)
- ----------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH AND SHORT-TERM INVESTMENTS ............................... (68,709) (412,454)
CASH AND SHORT-TERM INVESTMENTS -- JANUARY 1 ............................................. 1,202,659 1,615,113
- ----------------------------------------------------------------------------------------------------------------------------
CASH AND SHORT-TERM INVESTMENTS -- DECEMBER 31 ........................................... $ 1,133,950 $ 1,202,659
============================================================================================================================
</TABLE>
See Notes to Financial Statements.
SAI-46
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 30 (POOLED)
of The Equitable Life Assurance Society of The United States Notes to the
Financial Statements
1. Separate Account No. 30 (the Account) was established as a separate account
of The Equitable Life Assurance Society of the United States (Equitable),
in conformity with the New York State Insurance Law. Pursuant to such law,
the net assets in the Account are not chargeable with liabilities arising
out of any other business of Equitable. Equitable engaged Lend Lease Real
Estate Investments, Inc. to act as investment manager for the Account.
On July 13, 1998, Lend Lease Corporation Limited changed the name of its
wholly-owned subsidiary, ERE Yarmouth, Inc., to Lend Lease Real Estate
Investments, Inc. ("Lend Lease" or "Management"). Lend Lease continues to
manage the Account for the Plan.
2. The Account participates primarily in Equitable's Prime Property Fund by
purchasing or redeeming units on the date Prime Property Fund units are
valued. Prime Property Fund invests in real estate as discussed in the
accompanying financial statements of Prime Property Fund.
The change in value of Prime Property Fund units owned by the Account is
recorded as unrealized appreciation (depreciation). Prime Property Fund's
unit value changes as a result of both investment income and increases and
decreases in investment value. In determining realized gains or losses from
the redemption of Prime Property Fund units, the cost of units sold is
recorded on a first-in, first-out basis.
The Account participates in Equitable's Separate Account No. 2A by
purchasing or redeeming units, depending on the Account's excess cash
availability or need for cash to meet Account liabilities or withdrawals.
The investments of Separate Account No. 2A consist of debt securities which
mature or can be liquidated in sixty days or less from the date of
acquisition. Short-term debt securities may also be purchased directly by
the Account. Interest income is recorded when earned and expenses are
recognized when incurred.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of income,
expenses, and unrealized gains (losses) during the reporting period. Actual
results could differ from those estimates.
3. Investments are valued as follows:
The Account's participation in Prime Property Fund is valued as of the last
business day of the month based upon the number of units held and the unit
value of Prime Property Fund. Investments held by Prime Property Fund are
valued as disclosed in Note B2 of the financial statements of Prime
Property Fund.
Separate Account No. 2A is primarily valued at amortized cost which
approximates market value.
4. Expense charges are made in accordance with the terms of the contracts
participating in the Account.
5. In the Statements of Cash Flows, the Account considers short-term
investments to be cash equivalents.
6. No federal income tax based on net investment income or realized and
unrealized gains was applicable to contracts participating in the Account
by reason of applicable sections of the Internal Revenue Code, and no
federal income tax payable by Equitable will affect the contracts.
SAI-47
<PAGE>
- --------------------------------------------------------------------------------
7. The ability of a client to withdraw funds from the Account is subject to the
availability of cash arising from net investment income, allocations and
the redemption of units in Prime Property Fund. To the extent that
withdrawal requests exceed such available cash, Management has uniform
procedures to provide for cash payments. As of December 31, 1998, the
Account is fulfilling withdrawal requests on a current basis.
8. These financial statements should be read in conjunction with the financial
statements of Prime Property Fund.
SAI-48
<PAGE>
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
The Equitable Life Assurance Society of the United States:
In our opinion, the accompanying statements of assets and liabilities and the
related statements of operations and changes in net assets and of cash flows
present fairly, in all material respects, the financial position of Prime
Property Fund of The Equitable Life Assurance Society of the United States (the
Account) at December 31, 1998 and 1997, and the results of its operations and
its cash flows for the years then ended in conformity with generally accepted
accounting principles. These financial statements are the responsibility of the
Account's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplementary financial information
(consisting of Schedule X and Sechedule XII) of the Account for the years ended
December 31, 1998 and 1997 included in the Statement of Additional Information,
is presented for purposes of additional analysis and is not a required part of
the basic financial statements. Such information has been subjected to the
auditing procedures applied in the audits of the basic financial statements
and, in our opinion, is fairly stated in all material respects, in relation to
the basic financial statements taken as a whole.
PricewaterhouseCoopers LLP
Atlanta, Georgia
February 12, 1999
SAI-49
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF INDEPENDENT APPRAISERS
Prior to the fourth quarter of 1998, Lend Lease Real Estate Investments, Inc.
(Lend Lease) staff appraisers and independent fee appraisers made quarterly
market value estimates of all properties in Prime Property Fund. Beginning with
the fourth quarter, all market value estimates are made by independent third
party appraisers. During the first three quarters of 1998, those appraisals
completed by Lend Lease staff were independently reviewed by
PricewaterhouseCoopers LLP, Arthur Andersen LLP, and Landauer Real Estate
Counselors. Based on our review and analysis, we concur with the value
estimates on properties prepared by Lend Lease staff as of the calendar quarter
during which we conducted our review.
We have had the full co-operation of Lend Lease with complete and unrestricted
access to all underlying documents including leases, operating agreements,
budgets and partnership joint venture agreements. We have, where in our opinion
deemed appropriate, independently researched the market for additional data and
performed supplemental analysis to complete our review.
Our review has been made in conformity with and subject to the Code of
Professional Ethics and the Uniform Standards of Professional Appraisal
Practice of the Appraisal Institute.
PricewaterhouseCoopers LLP
Arthur Andersen LLP
Landauer Real Estate Counselors
December 31, 1998
SAI-50
<PAGE>
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------------
1998 1997
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS:
Real estate investments at value (Notes B and C):
Properties $2,650,035,000 $2,585,820,000
Partnership equities and related mortgage loans receivable 458,805,914 394,696,810
Mortgage loans receivable 178,800,000 191,830,000
Investment in REIT stock -- 57,488,432
- ------------------------------------------------------------------------------------------------------
Total real estate investments at value 3,287,640,914 3,229,835,242
Cash and short-term investments (Notes B and C) 20,000,143 45,737,619
Accrued investment income 52,194,434 40,831,682
Prepaid real estate expenses and taxes 3,291,073 7,189,583
Other assets 11,648,878 12,925,228
- ------------------------------------------------------------------------------------------------------
TOTAL ASSETS 3,374,775,442 3,336,519,354
- ------------------------------------------------------------------------------------------------------
LIABILITIES:
Mortgage loans payable (Note D) 410,001,245 346,784,929
Notes payable (Note D) 487,204,169 296,698,644
Accrued real estate expenses and taxes 42,279,908 41,463,134
Accrued asset management fees and other liabilities 27,734,613 25,587,914
Accrued capital expenditures 18,974,050 18,590,824
Accrued interest 10,422,446 8,846,253
- ------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 996,616,431 737,971,698
- ------------------------------------------------------------------------------------------------------
NET ASSETS $2,378,159,011 $2,598,547,656
- ------------------------------------------------------------------------------------------------------
</TABLE>
See notes to Financial Statements
SAI-51
<PAGE>
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS AND CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------
1998 1997
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Investment income (Notes B and C):
Rental income from real estate properties $ 382,219,611 $ 395,492,363
Income from partnership operations and interest from related
mortgage loans receivable 29,167,339 32,399,826
Interest from mortgage loans receivable 13,401,412 14,965,016
Interest from short-term investments 7,706,114 10,979,312
Other 4,588,412 2,169,203
- ------------------------------------------------------------------------------------------------------------
Total 437,082,888 456,005,720
- ------------------------------------------------------------------------------------------------------------
Expenses (Note B):
Real estate operating expenses 113,781,811 121,805,252
Real estate taxes 41,958,513 44,079,811
Interest on mortgage loans payable and notes payable (Note D) 51,329,091 40,041,357
Asset management fees (Note H) 25,733,739 28,288,090
- ------------------------------------------------------------------------------------------------------------
Total 232,803,154 234,214,510
- ------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 204,279,734 221,791,210
- ------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) on Investments (Note B):
Realized gain (loss) from sale of investments:
Net proceeds from sales or dispositions 541,139,725 674,097,149
Less: Cost of investments sold or disposed 650,348,706 787,923,323
Less: Realization of unrealized gain (loss) on investments sold (110,421,648) (97,499,466)
- ------------------------------------------------------------------------------------------------------------
Net realized gain (loss) from sale of investments 1,212,667 (16,326,708)
Change in unrealized gain on investments 224,539,850 150,151,936
- ------------------------------------------------------------------- -------------- --------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS 225,752,517 133,825,228
- ------------------------------------------------------------------------------------------------------------
Increase in net assets attributable to investment activities 430,032,251 355,616,438
- ------------------------------------------------------------------------------------------------------------
FROM CLIENT TRANSACTIONS:
Allocations 92,886,413 32,383,484
Withdrawals (Note F) (743,307,309) (774,452,833)
- ------------------------------------------------------------------------------------------------------------
Decrease in net assets attributable to client transactions (650,420,896) (742,069,349)
- ------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS (220,388,645) (386,452,911)
NET ASSETS -- JANUARY 1 2,598,547,656 2,985,000,567
- ------------------------------------------------------------------------------------------------------------
NET ASSETS -- DECEMBER 31 $2,378,159,011 $2,598,547,656
- ------------------------------------------------------------------------------------------------------------
Unit Value $ 8,444.24 $ 7,110.90
Units Outstanding 281,631 365,432
- ------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to Financial Statements
SAI-52
<PAGE>
- --------------------------------------------------------------------------------
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------
1998 1997
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net investment income $ 204,279,734 $ 221,791,210
- ------------------------------------------------------------------------------------------------------------
Adjustments to reconcile net investment income to net cash flow
provided by operating activities:
Changes in assets -- (increase) decrease:
Accrued investment income (14,809,048) 23,802,949
Prepaid real estate expenses and taxes 3,898,510 (1,434,416)
Other assets 1,309,622 (499,311)
Changes in liabilities -- increase (decrease):
Accrued real estate expenses, taxes and interest 2,392,967 (7,852,381)
Accrued asset management fees and other liabilities 2,146,699 (166,776)
- ------------------------------------------------------------------------------------------------------------
Total adjustments (5,061,250) 13,850,065
- ------------------------------------------------------------------------------------------------------------
Net Cash Flow Provided by Operating Activities 199,218,484 235,641,275
- ------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES:
Additions to real estate properties (88,674,964) (127,615,121)
Acquisitions of real estate properties (241,578,141) (105,555,755)
Proceeds from real estate properties sold 406,747,504 573,680,235
Acquisitions of REIT stock (7,002,273) (44,078,996)
Proceeds from REIT stock sold 56,879,481 39,734,765
Proceeds from mortgage loans receivable sold -- 12,959,805
Repayments of mortgage loans receivable 12,573,235 4,065,692
Acquisitions of partnership equities (26,000,000) (26,000,000)
Proceeds from partnership equities sold 65,347,929 27,722,344
Contributions to partnership equities (1,556,957) (1,586,762)
Distributions from partnerships less than net cash provided by
partnership operating activities (4,959,448) (10,302,892)
Distributions from partnerships provided by partnership financing
activities -- 69,194,716
- ------------------------------------------------------------------------------------------------------------
Net Cash Flow Provided by Investing Activities 171,776,366 412,218,031
- ------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES:
Proceeds from mortgage loans payable 300,865,198 25,000,000
Principal payments on mortgage loans payable (236,539,927) (341,038,853)
Proceeds from notes payable 385,000,000 400,000,000
Principal payments on notes payable (195,000,000) (100,000,000)
Payments for deferred financing costs (603,429) (3,301,356)
Allocations 92,853,141 31,685,924
Withdrawals (743,307,309) (774,452,833)
- ------------------------------------------------------------------------------------------------------------
Net Cash Flow Used in Financing Activities (396,732,326) (762,107,118)
- ------------------------------------------------------------------------------------------------------------
Net Decrease in Cash and Short-term Investments (25,737,476) (114,247,812)
Cash and Short-term Investments at January 1 45,737,619 159,985,431
- ------------------------------------------------------------------------------------------------------------
Cash and Short-term Investments at December 31 $ 20,000,143 $ 45,737,619
- ------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
SAI-53
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
A: GENERAL
Prime Property Fund (the Account) was established as a separate account of The
Equitable Life Assurance Society of the United States (Equitable) in conformity
with the New York State Insurance Law for the purpose of acquiring real estate
and real estate related investments. Pursuant to such law, the net assets in
the Account are not chargeable with liabilities arising out of any other
business of Equitable. Equitable engaged Lend Lease Real Estate Investments,
Inc. to act as investment advisor for the Account.
On July 13, 1998, Lend Lease Corporation Limited changed the name of its wholly
owned subsidiary, ERE Yarmouth, Inc., to Lend Lease Real Estate Investments,
Inc. ("Lend Lease" or "Management"). Lend Lease continues to advise Equitable
with respect to the Account.
B: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1. INVESTMENT TRANSACTIONS
Real estate property acquisitions are recorded as of the date of closing.
Mortgage and construction loans receivable and capital contributions to
partnership equities are recorded as of the date funds are advanced. Purchase
money mortgages and common stock investments acquired as consideration received
for real estate sold are recorded as of the closing date of the sales
transaction.
Expenditures which extend economic life or represent additional capital
investments benefiting future periods (including tenant improvements and
leasing commissions) are capitalized. For properties under development or major
expansion, carrying costs related to the development or expansion, principally
real estate taxes, interest, and utility costs, are capitalized prior to
substantial completion of tenant improvements for a maximum period of one year
from cessation of major construction activity. Historical cost depreciation is
not recognized on real estate properties.
Rental income is recognized when due in accordance with the terms of the
respective leases rather than being averaged over the lives of the leases.
Expenses are recognized when incurred. Income from partnership operations
represents the Account's share of partnership income excluding historical cost
depreciation.
The Account determines realized gain (loss) by comparing net proceeds from the
sale of investments to the cost of the investments sold. The unrealized gain
(loss) previously recorded for these investments is then reversed and reported
as realization of unrealized gain (loss) on investments sold in the Statement
of Operations and Changes in Net Assets.
Costs incurred in connection with obtaining borrowings are deferred and
amortized over the length of the borrowing using the straight-line method. The
unamortized costs are netted against the principal amount of the obligation
outstanding for financial statement presentation.
Mortgage loans and notes payables are stated at estimated market value.
Benefits or detriments resulting from a differential in current mortgage
interest rates and contractual mortgage interest rates and other factors are
taken into consideration in determining the market value of the borrowings.
2. VALUATION OF INVESTMENTS
The values of real estate investments are estimated in accordance with the
policies and procedures of the Appraisal Institute. Ultimate realization of the
market values is dependent to a great extent on economic and other conditions
SAI-54
<PAGE>
- --------------------------------------------------------------------------------
that are beyond Management's control (such as general economic conditions,
conditions affecting tenants and other events occurring in the markets in which
individual properties are located). Further, values may or may not represent
the prices at which the real estate investments would sell since market prices
of real estate investments can only be determined by negotiation between a
willing buyer and seller. Market value considers the financial aspects of a
property, market transactions and the relative yield for an asset as measured
against alternative investments.
Real Estate Properties and Partnership Equities
The values of real estate properties and partnership equities have been
prepared giving consideration to Income, Cost, and Market Data Approaches of
estimating property value. The Income Approach projects an income stream for a
property (typically 10 years) and discounts this income plus a reversion
(presumed sale) into a present value. Yield rates and growth assumptions
utilized in this approach are derived from market transactions as well as other
financial and demographic data. The Cost Approach estimates the replacement
cost of the building less depreciation plus the land value. Generally, this
approach provides a check on the Income Approach. The Market Data Approach
compares recent transactions to the appraised property. Adjustments are made
for dissimilarities which typically provide a range of value. Generally, the
Income Approach carries the most weight in the value reconciliation.
Investment values are determined quarterly from limited restricted appraisals,
in accordance with the Uniform Standards of Professional Appraisal Practice,
which include less documentation but nevertheless meet minimum requirements of
the Appraisal Standards Board and the Appraisal Institute and are considered
appraisals. In these appraisals, a full discounted cash flow analysis, which is
the basis of an Income Approach, is the primary focus. Interim monthly
valuations are determined giving consideration to material investment
transactions. Full appraisal reports on selected properties are prepared on a
rotating basis.
During 1997 and the first three quarters of 1998, appraisals were prepared by
Management's valuation staff or third-party appraisers. All staff appraisals
were concurred with and reviewed by one of three designated third-party
appraisal firms, which also physically inspected one-third of the properties
each year on a rotating basis. In the fourth quarter of 1998, all appraisals
for the Account were prepared by independent external appraisers. The external
appraisals are reviewed by the external Appraisal Management Firm and the Lend
Lease Chief Appraiser. All appraisal reports and appraisal reviews comply with
the currently published Uniform Standards of Professional Appraisal Practice,
as promulgated by the Appraisal Institute.
Since appraisals take into consideration the estimated effect of physical
depreciation, a more meaningful financial statement presentation is achieved by
excluding historical cost depreciation from net investment income. This
presentation does not affect the net assets or unit value of the Account.
Partnership equities are stated at the Account's equity in the value of the net
assets of the partnerships.
Certain real estate and partnership equity properties may have a market value
that is lower than the outstanding principal amount of the mortgage loan
secured by the investment. If the Account's obligation is limited to the value
of the individual property and if Management intends to limit the Account's
exposure in the property to its existing investment, then the value of the
property is adjusted to equal the outstanding principal amount of the
obligation plus incidental liabilities. Upon transfer of properties in
satisfaction of debt, the Account reclassifies previously recognized unrealized
losses to realized gains and losses.
Mortgage Loans Receivable
The fair value of mortgage loans receivable held in the Account has been
determined by one or more of the following criteria as appropriate: (i) on the
basis of estimated market interest rates for loans of comparable quality and
maturity,
SAI-55
<PAGE>
- --------------------------------------------------------------------------------
(ii) by recognizing the value of equity participations and options to enter
into equity participations contained in certain loan instruments and (iii)
giving consideration to the value of the underlying security.
Common Stock Investments
The value of the investment in REIT stock was determined monthly based on
published market quotations.
Short-Term Investments
Short-term investments are primarily valued at amortized cost, which
approximates market value.
3. USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires Management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amount of income, expenses, and
unrealized gains (losses) during the reporting period. Actual results could
differ from those estimates.
SAI-56
<PAGE>
- --------------------------------------------------------------------------------
C: INVESTMENTS
1. REAL ESTATE INVESTMENTS
The Account's real estate investments are composed of the following:
<TABLE>
<CAPTION>
DECEMBER 31, 1998 DECEMBER 31, 1997
----------------------------- ---------------------------
(MILLIONS) COST VALUE COST VALUE
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PROPERTIES:
Office $ 1,294.7 $ 1,177.0 $ 1,261.6 $ 972.6
- --------------------------------------------------------------------------------
Retail 1,029.5 908.0 1,245.9 1,070.9
- --------------------------------------------------------------------------------
Industrial/R&D 419.8 433.8 431.6 438.6
- --------------------------------------------------------------------------------
Hotel 105.6 105.0 100.8 99.4
- --------------------------------------------------------------------------------
Other 28.3 26.2 4.1 4.3
- --------------------------------------------------------------------------------
Subtotal 2,877.9 2,650.0 3,044.0 2,585.8
- --------------------------------------------------------------------------------
</TABLE>
PARTNERSHIP EQUITIES AND RELATED MORTGAGE LOANS RECEIVABLE:
<TABLE>
<S> <C> <C> <C> <C>
Office 169.6 303.3 174.9 214.1
- --------------------------------------------------------------------------------
Retail 4.3 79.5 .8 66.7
- --------------------------------------------------------------------------------
Industrial/R&D 19.3 16.0 18.8 13.8
- --------------------------------------------------------------------------------
Hotel -- -- 59.7 66.8
- --------------------------------------------------------------------------------
Other 62.4 60.0 43.6 33.3
- --------------------------------------------------------------------------------
Subtotal 255.6 458.8 297.8 394.7
- --------------------------------------------------------------------------------
</TABLE>
MORTGAGE LOANS RECEIVABLE:
<TABLE>
<S> <C> <C> <C> <C>
Office -- -- 12.4 12.4
- --------------------------------------------------------------------------------
Retail 144.6 178.8 146.0 179.4
- --------------------------------------------------------------------------------
Subtotal 144.6 178.8 158.4 191.8
- --------------------------------------------------------------------------------
</TABLE>
INVESTMENT IN REIT STOCK:
<TABLE>
<S> <C> <C> <C> <C>
Other -- -- 55.2 57.5
- --------------------------------------------------------------------------------
Subtotal -- -- 55.2 57.5
- --------------------------------------------------------------------------------
Total $ 3,278.1 $ 3,287.6 $ 3,555.4 $ 3,229.8
- --------------------------------------------------------------------------------
</TABLE>
SAI-57
<PAGE>
- --------------------------------------------------------------------------------
2. REAL ESTATE PARTNERSHIP EQUITIES
The Account's equity interests in real estate partnerships and their respective
financial positions at December 31, 1998 and 1997 (based on market valuations
determined for the Account) and results of operations for the years then ended
are summarized as follows:
<TABLE>
<CAPTION>
1998 1997
- --------------------------------------------------------------------------------
<S> <C> <C>
Number of interests 13 15
- --------------------------------------------------------------------------------
Ownership positions 33.3--75.0% 33.3--75.0%
- --------------------------------------------------------------------------------
Account's equity value (millions) $337 $279
- --------------------------------------------------------------------------------
Notes receivable related to partnership
equities (millions) $20 $18
- --------------------------------------------------------------------------------
Partnership assets (millions)* $1,218 $1,558
- --------------------------------------------------------------------------------
Partnership liabilities (millions)* $573 $1,007
- --------------------------------------------------------------------------------
Partnership income before depreciation (millions)* $31 $50
- --------------------------------------------------------------------------------
</TABLE>
* Stated at 100%.
3. MORTGAGE LOANS RECEIVABLE
At December 31, 1998, mortgage loans receivable at a fair value of $280.7
million of which $101.9 million related to partnership equities, $157.0 million
in other mortgage loans receivable and $21.8 million of rated commercial
mortgage backed securities, had interest rates ranging from 8.7% to 13.1%.
Aggregate annual receipts of mortgage principal due during the five years
following December 31, 1998 and thereafter are as follows:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31, (MILLIONS)
- --------------------------------------------------------------------------------
<S> <C>
1999 $ 64
- --------------------------------------------------------------------------------
2000 1
- --------------------------------------------------------------------------------
2001 22
- --------------------------------------------------------------------------------
2002 40
- --------------------------------------------------------------------------------
2003 120
- --------------------------------------------------------------------------------
Thereafter --
- --------------------------------------------------------------------------------
Total $247
================================================================================
</TABLE>
4. SHORT-TERM INVESTMENTS
The Account's short-term investments are composed of participation in
Equitable's Separate Account No. 2A. The assets of Separate Account No. 2A
consist of debt securities maturing in sixty days or less from the date of
acquisition. Such debt securities may include bankers' acceptances,
certificates of deposit, commercial paper, and repurchase agreements.
Short-term debt securities may also be purchased directly by the Account.
SAI-58
<PAGE>
- --------------------------------------------------------------------------------
D: BORROWINGS
1. MORTGAGE LOANS PAYABLE
Mortgage loans payable consist of the following at December 31, 1998:(1)
<TABLE>
<CAPTION>
(MILLIONS)
- --------------------------------------------------------------------------------------------------------
<S> <C>
LIBOR plus .80% or .87% loan collateralized by two real estate properties with a market
value of $443.5 million. Maturing June 2000. $ 225.0
- --------------------------------------------------------------------------------------------------------
LIBOR plus 1.35% loan collateralized by two real estate properties with a market value of
$160.8 million. Maturing April 1999. 94.3
- --------------------------------------------------------------------------------------------------------
6.16% loan collateralized by a real estate property with a market value of $136.0
million. Maturing October 2005. 66.0
- --------------------------------------------------------------------------------------------------------
9.0% loan collateralized by a real estate property with a market value of $15.6 million.
Maturing March 2000. 12.5
- --------------------------------------------------------------------------------------------------------
10.07% loan collateralized by a real estate property with a market value of $18.4
million. Maturing June 2001. 9.8
- --------------------------------------------------------------------------------------------------------
9.375% loan collateralized by a real estate property with a market value of $3.9 million.
Maturing February 2000. 3.5
- --------------------------------------------------------------------------------------------------------
Total $ 411.1
========================================================================================================
</TABLE>
(1) Market values shown are as of 12/31/98.
A total of $1.4 million in financing costs have been incurred with respect to
the mortgage loans payable. These costs have been deferred and are being
amortized over the life of the mortgages. As of December 31, 1998, $1.1 million
remains unamortized.
The amounts shown above represent principal outstanding. The unamortized
financing costs are netted against the principal amount of the obligation
outstanding for financial statement presentation.
Scheduled aggregate annual payments of principal on mortgage loans payable are
as follows:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31, (MILLIONS)
- --------------------------------------------------------------------------------
<S> <C>
1999 $ 94.4
- --------------------------------------------------------------------------------
2000 241.1
- --------------------------------------------------------------------------------
2001 9.8
- --------------------------------------------------------------------------------
2002 .8
- --------------------------------------------------------------------------------
2003 .8
- --------------------------------------------------------------------------------
Thereafter 64.2
- --------------------------------------------------------------------------------
Total $ 411.1
================================================================================
</TABLE>
2. NOTES PAYABLE
In August 1997, the Account issued $300 million of unsecured notes payable made
up of the following: $125 million 6.80% notes due August 15, 2002 and $175
million 7.00% notes due August 15, 2004. Interest on the notes is
SAI-59
<PAGE>
- --------------------------------------------------------------------------------
payable on February 15 and August 15 of each year, commencing February 1998.
The notes are redeemable at the option of the Account, in whole or in part, at
any time at a redemption price equal to the sum of the principal amount of the
notes or portion thereof being redeemed plus accrued and unpaid interest
thereon plus a pre-payment penalty amount.
The terms of the notes include covenants which, among other things, require
maintenance of certain financial ratios and restrict encumbrance of assets and
creation of indebtedness. The Account was in compliance with such covenants at
December 31, 1998 and 1997.
Financing costs of $3.1 million have been incurred since the time of the
borrowing. These costs have been deferred and are being amortized over the life
of the notes. As of December 31, 1998, $2.4 million remains unamortized. The
unamortized costs are netted against the principal amount of the obligation
outstanding for financial statement presentation.
3. LINE OF CREDIT
In June of 1997, the Account entered into a $250 million revolving credit
agreement with a number of banks. The agreement expires in June 2000. Under the
terms of the agreement, interest rates are determined at the time of the
borrowing and are based on London Interbank Offered Rates (LIBOR) plus .50% to
.75%, or other alternative rates. In addition, the Account pays a quarterly
commitment fee ranging from .125% to .175% per annum on the average daily
unused amount. During the year the Account borrowed $385 million and repaid
$195 million on an unsecured basis under the agreement. At December 31, 1998,
there was $190 million in borrowings outstanding under the agreement.
The terms of the credit agreement include various covenants which provide,
among other things, for the maintenance of consolidated net assets of not less
than $1.5 billion and other restrictions on investments and outstanding
indebtedness. The Account was in compliance with such covenants at December 31,
1998 and 1997.
Financing costs of $.7 million were incurred when the agreement was executed.
These costs were deferred and are being amortized over the life of the credit
agreement. As of December 31, 1998, $.4 million remains unamortized. The
unamortized costs are netted against the notes payable for financial statement
presentation.
4. EXTINGUISHMENT OF PARTNERSHIP DEBT
During 1998, a partnership in which the Account held a 50% interest conveyed a
property to the lender in full satisfaction of a mortgage loan payable. Upon
conveyance, the Account reclassified a previously recognized unrealized loss of
$27.5 million, the cost of the Account's interest in the partnership, to a
realized loss. In addition the Account received a cash distribution of
approximately $6.5 million and a release on an outstanding liability for $7.6
million for which the Account recorded realized gains.
E: LEASES
Minimum future rentals to be received on real estate properties, excluding
partnership equities, under noncancelable operating leases in effect as of
December 31, 1998 are as follows:
SAI-60
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31, (MILLIONS)
- --------------------------------------------------------------------------------
<S> <C>
1999 $ 236.1
- --------------------------------------------------------------------------------
2000 206.8
- --------------------------------------------------------------------------------
2001 180.0
- --------------------------------------------------------------------------------
2002 149.9
- --------------------------------------------------------------------------------
2003 119.5
- --------------------------------------------------------------------------------
Thereafter 346.5
- --------------------------------------------------------------------------------
Total $ 1,238.8
================================================================================
</TABLE>
Contingent rentals included in investment income were approximately $5.5
million and $6.5 million in 1998 and 1997, respectively.
F: WITHDRAWALS
The ability of a client to withdraw funds from the Account is subject to the
availability of cash arising from net investment income, allocations, and the
sale of investments in the normal course of business. To the extent that
withdrawal requests exceed such available cash, Management has uniform
procedures to provide for cash payments, which may be deferred for such period
as Management considers necessary to protect the interests of other clients in
the Account or to obtain the funds to be withdrawn. At December 31, 1998 and
1997, withdrawal requests exceeded available cash.
G: RELATED PARTY TRANSACTIONS
At December 31, 1998 and 1997, interests of retirement plans for employees,
managers, and agents of Equitable in the Account aggregated $94.6 million
(4.0%) and $80.3 million (3.1%), respectively, of the net assets of the
Account.
Compass Management & Leasing (Compass) and and ERE Yarmouth Retail Group,
affiliates of Lend Lease, had been retained to provide management and leasing
services for certain properties of the Account. On September 30, 1998, Lend
Lease sold Compass and ERE Yarmouth Retail Group to LaSalle Partners
Incorporated (LaSalle). LaSalle will continue to manage certain properties for
the Account and Lend Lease will continue to engage LaSalle to provide similar
services from time to time on a non exclusive basis.
Due to the structure of the sale of Compass and ERE Yarmouth Retail Group to
LaSalle, Lend Lease will continue to comply with an exemption from the
Department of Labor which allows it to charge market rate property management
and leasing fees for properties LaSalle manages for the Account. All such fees
must be approved by an independent fiduciary. During 1998 and 1997, Compass,
ERE Yarmouth Retail Group and LaSalle earned an aggregate of $10.5 million and
$12.9 million, respectively, in property management and leasing fees from the
Account, and in addition were reimbursed an aggregate of $13.9 million and
$14.6 million, respectively, for payroll expenses for on-site personnel.
The Account's investment in REIT stock was managed by an affiliate, Lend
Lease/Rosen Real Estate Securities LLC, and was not subject to an additional
asset management fee. As of December 31, 1998 the Account's investment in REIT
stock was zero.
H: FEES
Management charges clients in the Account a monthly asset management fee based
on the client's prior month-end net asset value at the annual rates shown
below:
SAI-61
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AMOUNT OF FUNDS ANNUAL RATE
- --------------------------------------------------------------------------------
<S> <C>
First $10 million 1.15%
- --------------------------------------------------------------------------------
Next $15 million 1.00%
- --------------------------------------------------------------------------------
Excess over $25 million 0.80%
================================================================================
</TABLE>
Additional fees may also be charged to clients for certain optional services
provided by Management.
At December 31, 1998 and 1997, the clients' liability to Management for asset
management fees totaled $4.6 million and $4.4 million, respectively. Account
investments in Separate Account No. 2A are not subject to an additional asset
management fee.
I: SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
In the Statements of Cash Flows, the Account considers short-term investments
to be cash equivalents.
Cash payments of interest were $51.9 million and $32.8 million during 1998 and
1997, respectively.
Non-cash investing and financing activities are summarized as follows:
<TABLE>
<CAPTION>
1998 1997
(MILLIONS) (MILLIONS)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Conveyance of partnership equity to lenders, at cost. $12 --
- -----------------------------------------------------------------------------------------------------------------
Write off of partnership notes receivable, at cost. $ 2 --
- -----------------------------------------------------------------------------------------------------------------
Write off of mortgage receivable, at cost. $ 8 --
- -----------------------------------------------------------------------------------------------------------------
Conversion of real estate property to partnership equity, at cost -- $ 55
- -----------------------------------------------------------------------------------------------------------------
Refinancing of mortgage loans payable -- $135
- -----------------------------------------------------------------------------------------------------------------
Investment in REIT stock received as consideration for real estate properties sold -- $ 20
- -----------------------------------------------------------------------------------------------------------------
Capitalized interest on internally funded construction projects $ 2 $ 6
=================================================================================================================
</TABLE>
J: FEDERAL INCOME TAX
No federal income tax based on net investment income or realized and unrealized
gains was applicable to contracts participating in the Account by reason of
applicable sections of the Internal Revenue Code, and no federal income tax
payable by Equitable will affect the contracts.
K: INVESTMENT COMMITMENTS
As of December 31, 1998, the Account proposes to invest an additional $18.6
million in existing real estate investments and $75.6 million in new
properties.
SAI-62
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 8 (PRIME PROPERTY FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Supplementary Financial Information
Schedule X -- Supplementary Income Statement Information
(In thousands)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
COLUMN B
YEAR ENDED DECEMBER 31,
-----------------------
COLUMN A
ITEM 1998 1997
- --------------------------------------------------------------------------------
<S> <C> <C>
1. Maintenance and repairs .......................... $15,712 $16,772
- --------------------------------------------------------------------------------
2. Real estate taxes ................................ $41,545 $43,959
- --------------------------------------------------------------------------------
</TABLE>
Maintenance and Repairs is included in Real Estate Operating Expenses.
Other captions not included since such costs and expenses are not applicable or
did not exceed 1% of total revenues.
SAI-63
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 8 (PRIME PROPERTY FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Supplementary Financial Information
Schedule XII -- Mortgage Loans Receivable on Real Estate
As of December 31, 1998
(In thousands)
<TABLE>
<CAPTION>
- --------------------------------------------------------
CURRENT
EFFECTIVE FINAL
INTEREST MATURITY
DESCRIPTION RATE DATE
- --------------------------------------------------------
<S> <C> <C>
Mortgage Loans Receivable:
Participating mortgage secured 8.2% 07/01/03
by a shopping center in New
Castle County, DE
Secured by office, hotel, retail, 8.71% 04/01/99
garage and marina facility in
Boston, MA
Secured by office, hotel, retail, 12% 03/31/02
garage and marina facility in
Boston, MA
Secured by shopping center in 13.12% 10/22/01
Danbury, CT
- --------------------------------------------------------
Total ..........................
- --------------------------------------------------------
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
CARRYING
AMOUNT OF
FACE MORTGAGE
AMOUNT OF AT MARKET
DESCRIPTION PERIODIC PAYMENT TERMS MORTGAGE VALUE
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Mortgage Loans Receivable:
Participating mortgage secured Monthly payment of interest plus Participation in $123,338 $157,000
by a shopping center in New property cash flow. Loan due at maturity date.
Castle County, DE
Secured by office, hotel, retail, Quarterly interest only. Loan due at Maturity date. 63,000 63,000
garage and marina facility in
Boston, MA
Secured by office, hotel, retail, Monthly interest only to the extent of available cash 38,928 38,928
garage and marina facility in flow. Principal and all accrued unpaid interest due at
Boston, MA maturity date.
Secured by shopping center in Monthly payment of interest and $50,000 of 21,296 21,800
Danbury, CT principal. Remaining principal due at maturity date.
- ----------------------------------------------------------------------------------------------------------------
Total .......................... $246,562 $280,728
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
The following is a reconciliation of the carrying amounts of the above loans at
market value for the years ended December 31, 1998 and 1997:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
1998 1997
- -----------------------------------------------------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C>
Balance -- January 1 .................................................... $ 289,993 $ 300,026
Additions during the year:
Advances/New Loans ...................................................... 2,636 8,168
Deductions during the year: .............................................
Collection of principal and transfers to real estate properties ......... (12,573) (14,825)
Increase/(decrease) in unrealized gain/(loss) during the year ........... 8,172 (3,376)
Increase/(decrease) in realized gain/(loss) during the year ............. (7,500) --
- -----------------------------------------------------------------------------------------------------
Balance -- December 31 ................................................. $ 280,728 $ 289,993
- -----------------------------------------------------------------------------------------------------
</TABLE>
SAI-64
<PAGE>
- --------------------------------------------------------------------------------
NET INVESTMENT VALUE BY TYPE -- DECEMBER 31, 1998*
<TABLE>
<CAPTION>
INVESTMENT PERCENT OF TOTAL MORTGAGE LOANS NET INVESTMENT PERCENT OF
VALUE INVESTMENT PAYABLE VALUE TOTAL NET
(MILLIONS) VALUE (MILLIONS) (MILLIONS) INVESTMENT VALUE
---------- ----- ---------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
Office ................. $ 1,480.3 45.0% $ 65.9 $ 1,414.4 49.2%
Retail ................. 1,166.3 35.5 330.7 835.6 29.0
Industrial/R&D ......... 449.8 13.7 13.4 436.4 15.2
Hotel .................. 105.0 3.2 -- 105.0 3.6
Other .................. 86.2 2.6 -- 86.2 3.0
- ----------------------------------------------------------------------------------------------------------------------
Total .................. $ 3,287.6 100.0% $ 410.0 $ 2,877.6 100.0%
======================================================================================================================
</TABLE>
NUMBER OF INVESTMENTS BY TYPE AND LOCATION -- DECEMBER 31, 1998*
<TABLE>
<CAPTION>
OFFICE RETAIL INDUSTRIAL/R&D HOTEL OTHER TOTAL
------ ------ -------------- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Pacific ..................... 5 2 16 -- -- 23
Mountain .................... 2 1 4 -- -- 7
Southwest ................... 1 1 17 -- -- 19
Southeast ................... 1 2 4 2 1 10
West North Central .......... 5 2 2 -- -- 9
East North Central .......... 1 3 4 -- 1 9
Mideast ..................... 8 2 12 1 1 24
Northeast ................... 8 4 4 1 3 20
- ---------------------------------------------------------------------------------------------------
Total ....................... 31 17 63 4 6 121
===================================================================================================
</TABLE>
INVESTMENT VALUE BY TYPE AND LOCATION -- DECEMBER 31, 1998*
<TABLE>
<CAPTION>
OFFICE RETAIL INDUSTRIAL/R&D HOTEL OTHER TOTAL
------ ------ -------------- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Pacific ..................... 9.4% 9.0% 4.5% -- -- 22.9%
Mountain .................... 4.6 0.5 0.9 -- -- 6.0
Southwest ................... 0.2 0.4 3.9 -- -- 4.5
Southeast ................... 1.8 2.6 0.6 0.9% 0.8% 6.7
West North Central .......... 1.0 5.9 0.4 -- -- 7.3
East North Central .......... 4.2 3.9 0.5 -- -- 8.6
Mideast ..................... 10.0 5.8 2.5 0.9 0.8 20.0
Northeast ................... 13.8 7.4 0.4 1.4 1.0 24.0
- ----------------------------------------------------------------------------------------------------------
Total ....................... 45.0% 35.5% 13.7% 3.2% 2.6% 100.0%
==========================================================================================================
</TABLE>
* Unaudited financial information.
SAI-65
<PAGE>
- --------------------------------------------------------------------------------
DISTRIBUTION OF PROPERTIES BY PROPERTY MANAGER* -- DECEMBER 31, 1998**
<TABLE>
<CAPTION>
LEND LEASE LASALLE PARTNERS
------------------------- -------------------------
INVESTMENT INVESTMENT
NO. OF VALUE NO. OF VALUE
PROPERTIES (MILLIONS) PROPERTIES (MILLIONS)
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Office ................. -- $ -- 16 $ 862.0
Retail ................. -- -- 14 914.3
Industrial/R&D ......... 2 5.1 37 278.3
Hotel .................. -- -- -- --
Other .................. 3 32.5 -- --
- ----------------------------------------------------------------------------
Total .................. 5 $37.6 67 $ 2,054.6
============================================================================
<CAPTION>
OTHER THIRD-PARTY AGENTS TOTAL
------------------------- --------------------------
INVESTMENT INVESTMENT
NO. OF VALUE NO. OF VALUE
PROPERTIES (MILLIONS) PROPERTIES (MILLIONS)
------------ ------------ ------------ -------------
<S> <C> <C> <C> <C>
Office ................. 13 $ 516.4 29 $ 1,378.4
Retail ................. 1 73.2 15 987.5
Industrial/R&D ......... 24 166.4 63 449.8
Hotel .................. 4 105.0 4 105.0
Other .................. 3 53.7 6 86.2
- -----------------------------------------------------------------------------
Total .................. 45 $ 914.7 117 $ 3,006.9
=============================================================================
</TABLE>
* Includes wholly-owned and partnership equity properties.
** Unaudited financial information.
SAI-66
<PAGE>
- --------------------------------------------------------------------------------
February 8, 1999
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholder of
The Equitable Life Assurance Society of the United States
In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of earnings, of shareholder's equity and
comprehensive income 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, 1998 and
1997, and the results of their operations and their cash flows for each of the
three years in the period ended December 31, 1998, 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 method of accounting for long-lived assets in 1996.
PricewaterhouseCoopers LLP
New York, New York
SAI-67
<PAGE>
- --------------------------------------------------------------------------------
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
--------------- --------------
(IN MILLIONS)
<S> <C> <C>
ASSETS
Investments:
Fixed maturities:
Available for sale, at estimated fair value ........................ $ 18,993.7 $ 19,630.9
Held to maturity, at amortized cost ................................ 125.0 --
Mortgage loans on real estate ........................................ 2,809.9 2,611.4
Equity real estate ................................................... 1,676.9 2,495.1
Policy loans ......................................................... 2,086.7 2,422.9
Other equity investments ............................................. 713.3 951.5
Investment in and loans to affiliates ................................ 928.5 731.1
Other invested assets ................................................ 808.2 612.2
------------ -----------
Total investments ................................................. 28,142.2 29,455.1
Cash and cash equivalents ............................................. 1,245.5 300.5
Deferred policy acquisition costs ..................................... 3,563.8 3,236.6
Amounts due from discontinued operations .............................. 2.7 572.8
Other assets .......................................................... 3,051.9 2,687.4
Closed Block assets ................................................... 8,632.4 8,566.6
Separate Accounts assets .............................................. 43,302.3 36,538.7
------------ -----------
TOTAL ASSETS .......................................................... $ 87,940.8 $ 81,357.7
============ ===========
LIABILITIES
Policyholders' account balances ....................................... $ 20,889.7 $ 21,579.5
Future policy benefits and other policyholders' liabilities ........... 4,694.2 4,553.8
Short-term and long-term debt ......................................... 1,181.7 1,716.7
Other liabilities ..................................................... 3,474.3 3,267.2
Closed Block liabilities .............................................. 9,077.0 9,073.7
Separate Accounts liabilities ......................................... 43,211.3 36,306.3
------------ -----------
Total liabilities ................................................. 82,528.2 76,497.2
------------ -----------
Commitments and contingencies (Notes 11, 13, 14, 15 and 16)
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 ........................................ 3,110.2 3,105.8
Retained earnings ..................................................... 1,944.1 1,235.9
Accumulated other comprehensive income ................................ 355.8 516.3
------------ -----------
Total shareholder's equity ........................................ 5,412.6 4,860.5
------------ -----------
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY ............................ $ 87,940.8 $ 81,357.7
============ ===========
</TABLE>
See Notes to Consolidated Financial Statements.
SAI-68
<PAGE>
- --------------------------------------------------------------------------------
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
CONSOLIDATED STATEMENTS OF EARNINGS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
1998 1997 1996
-------------- ----------- -----------
(IN MILLIONS)
<S> <C> <C> <C>
REVENUES
Universal life and investment-type product policy fee income .......... $ 1,056.2 $ 950.6 $ 874.0
Premiums .............................................................. 588.1 601.5 597.6
Net investment income ................................................. 2,228.1 2,282.8 2,203.6
Investment gains (losses), net ........................................ 100.2 (45.2) (9.8)
Commissions, fees and other income .................................... 1,503.0 1,227.2 1,081.8
Contribution from the Closed Block .................................... 87.1 102.5 125.0
----------- --------- ---------
Total revenues ..................................................... 5,562.7 5,119.4 4,872.2
----------- --------- ---------
BENEFITS AND OTHER DEDUCTIONS
Interest credited to policyholders' account balances .................. 1,153.0 1,266.2 1,270.2
Policyholders' benefits ............................................... 1,024.7 978.6 1,317.7
Other operating costs and expenses .................................... 2,201.2 2,203.9 2,075.7
----------- --------- ---------
Total benefits and other deductions ................................ 4,378.9 4,448.7 4,663.6
----------- --------- ---------
Earnings from continuing operations before Federal income taxes,
minority interest and cumulative effect of accounting change ......... 1,183.8 670.7 208.6
Federal income taxes .................................................. 353.1 91.5 9.7
Minority interest in net income of consolidated subsidiaries .......... 125.2 54.8 81.7
----------- --------- ---------
Earnings from continuing operations before cumulative effect of
accounting change .................................................... 705.5 524.4 117.2
Discontinued operations, net of Federal income taxes .................. 2.7 (87.2) (83.8)
Cumulative effect of accounting change, net of Federal income
taxes ................................................................ -- -- (23.1)
----------- --------- ---------
Net Earnings .......................................................... $ 708.2 $ 437.2 $ 10.3
=========== ========= =========
</TABLE>
See Notes to Consolidated Financial Statements.
SAI-69
<PAGE>
- --------------------------------------------------------------------------------
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY AND
COMPREHENSIVE INCOME
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
1998 1997 1996
------------- ------------ -------------
(IN MILLIONS)
<S> <C> <C> <C>
Common stock, at par value, beginning and end of year ............. $ 2.5 $ 2.5 $ 2.5
---------- --------- ---------
Capital in excess of par value, beginning of year ................. 3,105.8 3,105.8 3,105.8
Additional capital in excess of par value ......................... 4.4 -- --
---------- --------- ---------
Capital in excess of par value, end of year ....................... 3,110.2 3,105.8 3,105.8
Retained earnings, beginning of year .............................. 1,235.9 798.7 788.4
Net earnings ...................................................... 708.2 437.2 10.3
---------- --------- ---------
Retained earnings, end of year .................................... 1,944.1 1,235.9 798.7
---------- --------- ---------
Accumulated other comprehensive income, beginning of year ......... 516.3 177.0 361.4
Other comprehensive income ........................................ (160.5) 339.3 (184.4)
---------- --------- ---------
Accumulated other comprehensive income, end of year ............... 355.8 516.3 177.0
---------- --------- ---------
TOTAL SHAREHOLDER'S EQUITY, END OF YEAR ........................... $ 5,412.6 $ 4,860.5 $ 4,084.0
========== ========= =========
COMPREHENSIVE INCOME
Net earnings ...................................................... $ 708.2 $ 437.2 $ 10.3
---------- --------- ---------
Change in unrealized gains (losses), net of reclassification
adjustment ....................................................... (149.5) 343.7 (206.6)
Minimum pension liability adjustment .............................. (11.0) (4.4) 22.2
---------- --------- ---------
Other comprehensive income ........................................ (160.5) 339.3 (184.4)
---------- --------- ---------
COMPREHENSIVE INCOME .............................................. $ 547.7 $ 776.5 $ (174.1)
========== ========= ==========
</TABLE>
See Notes to Consolidated Financial Statements.
SAI-70
<PAGE>
- --------------------------------------------------------------------------------
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
1998 1997 1996
-------------- -------------- --------------
(IN MILLIONS)
<S> <C> <C> <C>
Net earnings .......................................................... $ 708.2 $ 437.2 $ 10.3
Adjustments to reconcile net earnings to net cash provided by
operating activities:
Interest credited to policyholders' account balances ................. 1,153.0 1,266.2 1,270.2
Universal life and investment-type product policy fee income ......... (1,056.2) (950.6) (874.0)
Investment (gains) losses ............................................ (100.2) 45.2 9.8
Change in Federal income tax payable ................................. 123.1 (74.4) (197.1)
Other, net ........................................................... (324.9) 169.4 330.2
----------- ----------- -----------
Net cash provided by operating activities ............................. 503.0 893.0 549.4
----------- ----------- -----------
Cash flows from investing activities:
Maturities and repayments ............................................ 2,289.0 2,702.9 2,275.1
Sales ................................................................ 16,972.1 10,385.9 8,964.3
Purchases ............................................................ (18,578.5) (13,205.4) (12,559.6)
Decrease (increase) in short-term investments ........................ 102.4 (555.0) 450.3
Decrease in loans to discontinued operations ......................... 660.0 420.1 1,017.0
Sale of subsidiaries ................................................. -- 261.0 --
Other, net ........................................................... (341.8) (612.6) (281.0)
----------- ----------- -----------
Net cash provided (used) by investing activities ...................... 1,103.2 (603.1) (133.9)
----------- ----------- -----------
Cash flows from financing activities:
Policyholders' account balances:
Deposits .......................................................... 1,508.1 1,281.7 1,925.4
Withdrawals ....................................................... (1,724.6) (1,886.8) (2,385.2)
Net (decrease) increase in short-term financings ..................... (243.5) 419.9 (.3)
Repayments of long-term debt ......................................... (24.5) (196.4) (124.8)
Payment of obligation to fund accumulated deficit of
discontinued operations ............................................ (87.2) (83.9) --
Other, net ........................................................... (89.5) (62.7) (66.5)
----------- ----------- -----------
Net cash used by financing activities ................................. (661.2) (528.2) (651.4)
----------- ----------- -----------
Change in cash and cash equivalents ................................... 945.0 (238.3) (235.9)
Cash and cash equivalents, beginning of year .......................... 300.5 538.8 774.7
----------- ----------- -----------
Cash and Cash Equivalents, End of Year ................................ $ 1,245.5 $ 300.5 $ 538.8
=========== =========== ===========
Supplemental cash flow information ....................................
Interest Paid ........................................................ $ 130.7 $ 217.1 $ 109.9
=========== =========== ===========
Income Taxes Paid (Refunded) ......................................... $ 254.3 $ 170.0 $ (10.0)
=========== =========== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
SAI-71
<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 its wholly owned life insurance subsidiaries,
Equitable of Colorado ("EOC"), and, prior to December 31, 1996, 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"), in which Equitable Life has a 57.7%
ownership interest, and Donaldson, Lufkin & Jenrette, Inc. ("DLJ"), an
investment banking and brokerage affiliate in which Equitable Life has a 32.5%
ownership interest. AXA ("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 58.5% at December 31, 1998
(53.4% if all securities convertible into, and options on, common stock were to
be converted or exercised).
The Insurance segment offers a variety of traditional, variable and
interest-sensitive life insurance products, disability income, annuity
products, mutual fund and other investment products to individuals and small
groups. It also administers traditional participating group annuity contracts
with conversion features, generally for corporate qualified pension plans, and
association plans which provide full service retirement programs for
individuals affiliated with professional and trade associations. This segment
includes Separate Accounts for individual insurance and annuity products.
The Investment Services segment includes Alliance, the results of DLJ
which are accounted for on an equity basis, and, through June 10, 1997,
Equitable Real Estate Investment Management, Inc. ("EREIM"), a real estate
investment management subsidiary which was sold. Alliance provides diversified
investment fund management services to a variety of institutional clients,
including pension funds, endowments, and foreign financial institutions, as
well as to individual investors, principally through a broad line of mutual
funds. This segment includes institutional Separate Accounts which provide
various investment options for large group pension clients, primarily deferred
benefit contribution plans, through pooled or single group accounts. DLJ's
businesses include securities underwriting, sales and trading, merchant
banking, financial advisory services, investment research, venture capital,
correspondent brokerage services, online interactive brokerage services and
asset management. DLJ serves institutional, corporate, governmental and
individual clients both domestically and internationally. EREIM provided real
estate investment management services, property management services, mortgage
servicing and loan asset management, and agricultural investment management.
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.
SAI-72
<PAGE>
- --------------------------------------------------------------------------------
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 and
EREIM (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, liabilities and results of operations are presented in the
consolidated financial statements as single line items (see Note 7). Unless
specifically stated, all other footnote disclosures contained herein exclude
the Closed Block related amounts.
All significant intercompany transactions and balances except those with
the Closed Block and discontinued operations (see Note 8) have been eliminated
in consolidation. The years "1998," "1997" and "1996" refer to the years ended
December 31, 1998, 1997 and 1996, respectively. Certain reclassifications have
been made in the amounts presented for prior periods to conform these periods
with the 1998 presentation.
Closed Block
On July 22, 1992, Equitable Life established the Closed Block for the
benefit of certain individual participating policies which were in force on
that date. The assets allocated to the Closed Block, together with anticipated
revenues from policies included in the Closed Block, were reasonably expected
to be sufficient to support such business, including provision for payment of
claims, certain expenses and taxes, and for continuation of dividend scales
payable in 1991, assuming the experience underlying such scales continues.
Assets allocated to the Closed Block inure solely to the benefit of the
Closed Block policyholders 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 include the Group Non-Participating Wind-Up
Annuities ("Wind-Up Annuities") and the Guaranteed Interest Contract ("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
believes the allowance for future losses at December 31, 1998 is adequate to
provide for all future losses; however, the quarterly allowance review
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 8).
SAI-73
<PAGE>
- --------------------------------------------------------------------------------
Accounting Changes
In June 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 131, "Disclosures
about Segments of an Enterprise and Related Information". SFAS No. 131
establishes standards for public companies to report information about
operating segments in annual and interim financial statements issued to
shareholders. It also specifies related disclosure requirements for products
and services, geographic areas and major customers. Generally, financial
information must be reported using the basis management uses to make operating
decisions and to evaluate business performance. The Company implemented SFAS
No. 131 effective December 31, 1998 and continues to identify two operating
segments to reflect its major businesses: Insurance and Investment Services.
While the segment descriptions are the same as those previously reported,
certain amounts have been reattributed between the two reportable segments.
Prior period comparative segment information has been restated.
In March 1998, the American Institute of Certified Public Accountants
("AICPA") issued Statement of Position ("SOP") 98-1, "Accounting for the Costs
of Computer Software Developed or Obtained for Internal Use," which requires
capitalization of external and certain internal costs incurred to obtain or
develop internal-use computer software during the application development
stage. The Company applied the provisions of SOP 98-1 prospectively effective
January 1, 1998. The adoption of SOP 98-1 did not have a material impact on the
Company's consolidated financial statements. Capitalized internal-use software
is amortized on a straight-line basis over the estimated useful life of the
software.
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
Company's cost of funds. 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 intends to sell or abandon 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. Initial adoption of the impairment requirements of SFAS No. 121 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.
New Accounting Pronouncements
In October 1998, the FASB issued SFAS No. 134, "Accounting for
Mortgage-Backed Securities Retained after the Securitization of Mortgage Loans
Held for Sale by a Mortgage Banking Enterprise," which amends existing
accounting and reporting standards for certain activities of mortgage banking
enterprises and other enterprises that conduct operations that are
substantially similar to the primary operations of a mortgage banking
enterprise. This statement is effective for the first fiscal quarter beginning
after December 15, 1998. This statement is not expected to have a material
impact on the Company's consolidated financial statements.
SAI-74
<PAGE>
- --------------------------------------------------------------------------------
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which establishes accounting and reporting
standards for derivative instruments, including certain derivatives embedded in
other contracts, and for hedging activities. It requires all derivatives to be
recognized on the balance sheet at fair value. The accounting for changes in
the fair value of a derivative depends on its intended use. Derivatives not
used in hedging activities must be adjusted to fair value through earnings.
Changes in the fair value of derivatives used in hedging activities will,
depending on the nature of the hedge, either be offset in earnings against the
change in fair value of the hedged item attributable to the risk being hedged
or recognized in other comprehensive income until the hedged item affects
earnings. For all hedging activities, the ineffective portion of a derivative's
change in fair value will be immediately recognized in earnings.
SFAS No. 133 requires adoption in fiscal years beginning after June 15,
1999 and permits early adoption as of the beginning of any fiscal quarter
following issuance of the statement. Retroactive application to financial
statements of prior periods is prohibited. The Company expects to adopt SFAS
No. 133 effective January 1, 2000. Adjustments resulting from initial adoption
of the new requirements will be reported in a manner similar to the cumulative
effect of a change in accounting principle and will be reflected in net income
or accumulated other comprehensive income based upon existing hedging
relationships, if any. Management currently is assessing the impact of
adoption. However, Alliance's adoption is not expected to have a significant
impact on the Company's consolidated balance sheet or statement of earnings.
Also, since most of DLJ's derivatives are carried at fair values, the Company's
consolidated earnings and financial position are not expected to be
significantly affected by DLJ's adoption of the new requirements.
In late 1998, the AICPA issued SOP 98-7, "Deposit Accounting: Accounting
for Insurance and Reinsurance Contracts that Do Not Transfer Insurance Risk".
This SOP, effective for fiscal years beginning after June 15, 1999, provides
guidance to both the insured and insurer on how to apply the deposit method of
accounting when it is required for insurance and reinsurance contracts that do
not transfer insurance risk. The SOP does not address or change the
requirements as to when deposit accounting should be applied. SOP 98-7 applies
to all entities and all insurance and reinsurance contracts that do not
transfer insurance risk except for long-duration life and health insurance
contracts. This SOP is not expected to have a material impact on the Company's
consolidated financial statements.
In December 1997, the AICPA issued 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.
Valuation of Investments
Fixed maturities identified as available for sale are reported at
estimated fair value. Fixed maturities, which the Company has both the ability
and the intent to hold to maturity, are stated principally at amortized cost.
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.
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.
SAI-75
<PAGE>
- --------------------------------------------------------------------------------
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 (losses).
Unrealized investment gains and losses on equity securities and fixed
maturities available for sale held by the Company are accounted for as a
separate component of accumulated comprehensive income, 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.
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.
SAI-76
<PAGE>
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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 25 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 accumulated other comprehensive income 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, 1998, the
expected investment yield, excluding policy loans, generally ranged from 7.29%
grading to 6.5% 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
accumulated comprehensive income 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.
SAI-77
<PAGE>
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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, includes 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 Pension Par and DI reserves have been
calculated on a reasonable basis and are adequate, there can be no assurance
reserves will be sufficient to provide for future liabilities.
Claim reserves and associated liabilities for individual DI and major
medical policies were $938.6 million and $886.7 million at December 31, 1998
and 1997, 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:
SAI-78
<PAGE>
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<TABLE>
<CAPTION>
1998 1997 1996
--------- -------- --------
(IN MILLIONS)
<S> <C> <C> <C>
Incurred benefits related to current year ......... $ 202.1 $ 190.2 $ 189.0
Incurred benefits related to prior years .......... 22.2 2.1 69.1
--------- -------- --------
Total Incurred Benefits ........................... $ 224.3 $ 192.3 $ 258.1
========= ======== ========
Benefits paid related to current year ............. $ 17.0 $ 28.8 $ 32.6
Benefits paid related to prior years .............. 155.4 146.2 153.3
--------- -------- --------
Total Benefits Paid ............................... $ 172.4 $ 175.0 $ 185.9
========= ======== ========
</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, 1998, participating policies, including those in the
Closed Block, represent approximately 19.9% ($49.3 billion) of directly written
life insurance in force, net of amounts ceded.
Federal Income Taxes
The Company files a consolidated Federal income tax return with the
Holding Company and its 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 1998, 1997 and 1996, investment results of such Separate
Accounts were $4,591.0 million, $3,411.1 million and $2,970.6 million,
respectively.
Deposits to Separate Accounts are reported as increases in Separate
Accounts liabilities and are not reported in revenues. Mortality, policy
administration and surrender charges on all Separate Accounts are included in
revenues.
SAI-79
<PAGE>
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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 Statement,
compensation expense is recorded on the date of grant only if the current
market price of the underlying stock exceeds the option price. See Note 22 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, 1998
Fixed Maturities:
Available for Sale:
Corporate .................................. $ 14,520.8 $ 793.6 $ 379.6 $ 14,934.8
Mortgage-backed ............................ 1,807.9 23.3 .9 1,830.3
U.S. Treasury securities and U.S. government
and agency securities ..................... 1,464.1 107.6 .7 1,571.0
States and political subdivisions .......... 55.0 9.9 -- 64.9
Foreign governments ........................ 363.3 20.9 30.0 354.2
Redeemable preferred stock ................. 242.7 7.0 11.2 238.5
----------- -------- -------- -----------
Total Available for Sale ...................... $ 18,453.8 $ 962.3 $ 422.4 $ 18,993.7
=========== ======== ======== ===========
Held to Maturity: Corporate .................. $ 125.0 $ -- $ -- $ 125.0
=========== ======== ======== ===========
Equity Securities:
Common stock ................................. $ 58.3 $ 114.9 $ 22.5 $ 150.7
=========== ======== ======== ===========
DECEMBER 31, 1997
Fixed Maturities:
Available for Sale:
Corporate .................................. $ 14,850.5 $ 785.0 $ 74.5 $ 15,561.0
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 .......... 52.8 6.8 .1 59.5
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
=========== ======== ======== ===========
</TABLE>
SAI-80
<PAGE>
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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 determines 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, 1998 and 1997, securities without
a readily ascertainable market value having an amortized cost of $3,539.9
million and $3,759.2 million, respectively, had estimated fair values of
$3,748.5 million and $3,903.9 million, respectively.
The contractual maturity of bonds at December 31, 1998 is shown below:
<TABLE>
<CAPTION>
AVAILABLE FOR SALE
-----------------------------
AMORTIZED ESTIMATED
COST FAIR VALUE
------------- -------------
(IN MILLIONS)
<S> <C> <C>
Due in one year or less ............... $ 324.8 $ 323.4
Due in years two through five ......... 3,778.2 3,787.9
Due in years six through ten .......... 6,543.4 6,594.1
Due after ten years ................... 5,756.8 6,219.5
Mortgage-backed securities ............ 1,807.9 1,830.3
---------- ----------
Total ................................. $ 18,211.1 $ 18,755.2
========== ==========
</TABLE>
Corporate bonds held to maturity with an amortized cost and estimated fair
value of $125.0 million are due in one year or less.
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 concentrations in
any single issuer or 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, 1998,
approximately 15.1% of the $18,336.1 million aggregate amortized cost of bonds
held by the Company was considered to be other than investment grade.
In addition, 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.
SAI-81
<PAGE>
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Investment valuation allowances and changes thereto are shown below:
<TABLE>
<CAPTION>
1998 1997 1996
-------- -------- --------
(IN MILLIONS)
<S> <C> <C> <C>
Balances, beginning of year .............................. $ 384.5 $ 137.1 $ 325.3
SFAS No. 121 release ..................................... -- -- (152.4)
Additions charged to income .............................. 86.2 334.6 125.0
Deductions for writedowns and asset dispositions ......... (240.1) (87.2) (160.8)
-------- -------- --------
Balances, End of Year .................................... $ 230.6 $ 384.5 $ 137.1
======== ======== ========
Balances, end of year comprise:
Mortgage loans on real estate ........................... $ 34.3 $ 55.8 $ 50.4
Equity real estate ...................................... 196.3 328.7 86.7
-------- -------- --------
Total .................................................... $ 230.6 $ 384.5 $ 137.1
======== ======== ========
</TABLE>
At December 31, 1998, the carrying value of fixed maturities which are
non-income producing for the twelve months preceding the consolidated balance
sheet date was $60.8 million.
At December 31, 1998 and 1997, 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 $7.0 million (0.2% of total mortgage loans on real
estate) and $23.4 million (0.9% 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 $115.1 million and $183.4
million at December 31, 1998 and 1997, 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 $10.3 million,
$17.2 million and $35.5 million in 1998, 1997 and 1996, respectively. Gross
interest income on these loans included in net investment income aggregated
$8.3 million, $12.7 million and $28.2 million in 1998, 1997 and 1996,
respectively.
Impaired mortgage loans (as defined under SFAS No. 114) along with the
related provision for losses were as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1998 1997
----------- -----------
(IN MILLIONS)
<S> <C> <C>
Impaired mortgage loans with provision for losses ............ $ 125.4 $ 196.7
Impaired mortgage loans without provision for losses ......... 8.6 3.6
-------- --------
Recorded investment in impaired mortgage loans ............... 134.0 200.3
Provision for losses ......................................... (29.0) (51.8)
-------- --------
Net Impaired Mortgage Loans .................................. $ 105.0 $ 148.5
======== ========
</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
SAI-82
<PAGE>
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impairment is accrued on the net carrying value amount of the loan at the
interest rate used to discount the cash flows. Changes in the present value
attributable to changes in the amount or timing of expected cash flows are
reported as investment gains or losses.
During 1998, 1997 and 1996, respectively, the Company's average recorded
investment in impaired mortgage loans was $161.3 million, $246.9 million and
$552.1 million. Interest income recognized on these impaired mortgage loans
totaled $12.3 million, $15.2 million and $38.8 million ($.9 million, $2.3
million and $17.9 million recognized on a cash basis) for 1998, 1997 and 1996,
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, 1998 and 1997, the carrying value of equity real estate held for sale
amounted to $836.2 million and $1,023.5 million, respectively. For 1998, 1997
and 1996, respectively, real estate of $7.1 million, $152.0 million and $58.7
million was acquired in satisfaction of debt. At December 31, 1998 and 1997,
the Company owned $552.3 million and $693.3 million, respectively, of real
estate acquired in satisfaction of debt.
Depreciation of real estate held for production of income 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 $374.8 million and $541.1 million at December 31, 1998 and
1997, respectively. Depreciation expense on real estate totaled $30.5 million,
$74.9 million and $91.8 million for 1998, 1997 and 1996, respectively.
SAI-83
<PAGE>
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4) JOINT VENTURES AND PARTNERSHIPS
Summarized combined financial information for real estate joint ventures
(25 and 29 individual ventures as of December 31, 1998 and 1997, 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,
----------------------------
1998 1997
------------ -------------
(IN MILLIONS)
<S> <C> <C>
BALANCE SHEETS
Investments in real estate, at depreciated cost ...................... $ 913.7 $ 1,700.9
Investments in securities, generally at estimated fair value ......... 636.9 1,374.8
Cash and cash equivalents ............................................ 85.9 105.4
Other assets ......................................................... 279.8 584.9
--------- ----------
Total Assets ......................................................... $ 1,916.3 $ 3,766.0
========= ==========
Borrowed funds -- third party ........................................ $ 367.1 $ 493.4
Borrowed funds -- the Company ........................................ 30.1 31.2
Other liabilities .................................................... 197.2 284.0
--------- ----------
Total liabilities .................................................... 594.4 808.6
--------- ----------
Partners' capital .................................................... 1,321.9 2,957.4
--------- ----------
Total Liabilities and Partners' Capital .............................. $ 1,916.3 $ 3,766.0
========= ==========
Equity in partners' capital included above ........................... $ 312.9 $ 568.5
Equity in limited partnership interests not included above ........... 442.1 331.8
Other ................................................................ .7 4.3
--------- ----------
Carrying Value ....................................................... $ 755.7 $ 904.6
========= ==========
</TABLE>
<TABLE>
<CAPTION>
1998 1997 1996
-------- -------- --------
(IN MILLIONS)
<S> <C> <C> <C>
STATEMENTS OF EARNINGS
Revenues of real estate joint ventures .................... $ 246.1 $ 310.5 $ 348.9
Revenues of other limited partnership interests ........... 128.9 506.3 386.1
Interest expense -- third party ........................... (33.3) (91.8) (111.0)
Interest expense -- the Company ........................... (2.6) (7.2) (30.0)
Other expenses ............................................ (197.0) (263.6) (282.5)
-------- -------- --------
Net Earnings .............................................. $ 142.1 $ 454.2 $ 311.5
======== ======== ========
Equity in net earnings included above ..................... $ 59.6 $ 76.7 $ 73.9
Equity in net earnings of limited partnership interests not
included above ........................................... 22.7 69.5 35.8
Other ..................................................... -- (.9) .9
-------- -------- --------
Total Equity in Net Earnings .............................. $ 82.3 $ 145.3 $ 110.6
======== ======== ========
</TABLE>
SAI-84
<PAGE>
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5) NET INVESTMENT INCOME AND INVESTMENT GAINS (LOSSES)
The sources of net investment income are summarized as follows:
<TABLE>
<CAPTION>
1998 1997 1996
---------- ---------- ----------
(IN MILLIONS)
<S> <C> <C> <C>
Fixed maturities ...................... $ 1,489.0 $ 1,459.4 $ 1,307.4
Mortgage loans on real estate ......... 235.4 260.8 303.0
Equity real estate .................... 356.1 390.4 442.4
Other equity investments .............. 83.8 156.9 122.0
Policy loans .......................... 144.9 177.0 160.3
Other investment income ............... 185.7 181.7 217.4
---------- ---------- ----------
Gross investment income .............. 2,494.9 2,626.2 2,552.5
Investment expenses .................. (266.8) (343.4) (348.9)
---------- ---------- ----------
Net Investment Income ................. $ 2,228.1 $ 2,282.8 $ 2,203.6
========== ========== ==========
</TABLE>
Investment gains (losses), net, including changes in the valuation
allowances, are summarized as follows:
<TABLE>
<CAPTION>
1998 1997 1996
-------- -------- -------
(IN MILLIONS)
<S> <C> <C> <C>
Fixed maturities .............................. $ (24.3) $ 88.1 $ 60.5
Mortgage loans on real estate ................. (10.9) (11.2) (27.3)
Equity real estate ............................ 74.5 (391.3) (79.7)
Other equity investments ...................... 29.9 14.1 18.9
Sale of subsidiaries .......................... (2.6) 252.1 --
Issuance and sales of Alliance Units .......... 19.8 -- 20.6
Issuance and sale of DLJ common stock ......... 18.2 3.0 --
Other ......................................... (4.4) -- (2.8)
-------- -------- -------
Investment Gains (Losses), Net ................ $ 100.2 $ (45.2) $ (9.8)
======== ======== =======
</TABLE>
Writedowns of fixed maturities amounted to $101.6 million, $11.7 million
and $29.9 million for 1998, 1997 and 1996, respectively, and writedowns of
equity real estate subsequent to the adoption of SFAS No. 121 amounted to
$136.4 million for 1997. 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 fourth quarter 1997, $132.3 million of writedowns
on real estate held for production of income were recorded.
For 1998, 1997 and 1996, respectively, proceeds received on sales of fixed
maturities classified as available for sale amounted to $15,961.0 million,
$9,789.7 million and $8,353.5 million. Gross gains of $149.3 million, $166.0
million and $154.2 million and gross losses of $95.1 million, $108.8 million
and $92.7 million, respectively, were realized on these sales. The change in
unrealized investment gains (losses) related to fixed maturities classified as
available for sale for 1998, 1997 and 1996 amounted to $(331.7) million, $513.4
million and $(258.0) million, respectively.
SAI-85
<PAGE>
- --------------------------------------------------------------------------------
For 1998, 1997 and 1996, investment results passed through to certain
participating group annuity contracts as interest credited to policyholders'
account balances amounted to $136.9 million, $137.5 million and $136.7 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 which was
paid in 1998. The Company 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 continues
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 for the year ended December 31, 1996,
respectively, the businesses sold reported combined revenues of $91.6 million
and $226.1 million and combined net earnings of $10.7 million and $30.7
million.
In 1996, Alliance acquired the business of Cursitor Holdings L.P. 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 additional consideration to be
determined at a later date but currently estimated to not exceed $10.0 million.
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, 1998, the Company's
ownership of Alliance Units was approximately 56.7%.
SAI-86
<PAGE>
- --------------------------------------------------------------------------------
Net unrealized investment gains (losses), included in the consolidated
balance sheets as a component of accumulated comprehensive income and the
changes for the corresponding years, are summarized as follows:
<TABLE>
<CAPTION>
1998 1997 1996
-------- -------- --------
(IN MILLIONS)
<S> <C> <C> <C>
Balance, beginning of year ..................................... $ 533.6 $ 189.9 $ 396.5
Changes in unrealized investment gains (losses) ................ (242.4) 543.3 (297.6)
Changes in unrealized investment losses (gains) attributable to:
Participating group annuity contracts ......................... (5.7) 53.2 --
DAC ........................................................... 13.2 (89.0) 42.3
Deferred Federal income taxes ................................. 85.4 (163.8) 48.7
-------- -------- --------
Balance, End of Year ........................................... $ 384.1 $ 533.6 $ 189.9
======== ======== ========
Balance, end of year comprises:
Unrealized investment gains on:
Fixed maturities ............................................ $ 539.9 $ 871.2 $ 357.8
Other equity investments .................................... 92.4 33.7 31.6
Other, principally Closed Block ............................. 111.1 80.9 53.1
-------- -------- --------
Total ...................................................... 743.4 985.8 442.5
Amounts of unrealized investment gains attributable to:
Participating group annuity contracts ....................... (24.7) (19.0) (72.2)
DAC ......................................................... (127.8) (141.0) (52.0)
Deferred Federal income taxes ............................... (206.8) (292.2) (128.4)
-------- -------- --------
Total .......................................................... $ 384.1 $ 533.6 $ 189.9
======== ======== ========
</TABLE>
SAI-87
<PAGE>
- --------------------------------------------------------------------------------
6) ACCUMULATED OTHER COMPREHENSIVE INCOME
Accumulated other comprehensive income represents cumulative gains and
losses on items that are not reflected in earnings. The balances for the years
1998, 1997 and 1996 are as follows:
<TABLE>
<CAPTION>
1998 1997 1996
-------- -------- --------
(IN MILLIONS)
<S> <C> <C> <C>
Unrealized gains on investments ....................... $ 384.1 $ 533.6 $ 189.9
Minimum pension liability ............................. (28.3) (17.3) (12.9)
-------- -------- --------
Total Accumulated Other Comprehensive Income .......... $ 355.8 $ 516.3 $ 177.0
======== ======== ========
</TABLE>
The components of other comprehensive income for the years 1998, 1997 and
1996 are as follows:
<TABLE>
<CAPTION>
1998 1997 1996
-------- -------- --------
(IN MILLIONS)
<S> <C> <C> <C>
Net unrealized gains (losses) on investment securities:
Net unrealized gains (losses) arising during the period ......... $ (186.1) $ 564.0 $ (249.8)
Reclassification adjustment for (gains) losses included in net
earnings ...................................................... (56.3) (20.7) (47.8)
-------- -------- --------
Net unrealized gains (losses) on investment securities ........... (242.4) 543.3 (297.6)
Adjustments for policyholder liabilities, DAC and deferred
Federal income taxes ............................................ 92.9 (199.6) 91.0
-------- -------- --------
Change in unrealized gains (losses), net of reclassification and
adjustments ..................................................... (149.5) 343.7 (206.6)
Change in minimum pension liability .............................. (11.0) (4.4) 22.2
-------- -------- --------
Total Other Comprehensive Income ................................. $ (160.5) $ 339.3 $ (184.4)
======== ======== ========
</TABLE>
SAI-88
<PAGE>
- --------------------------------------------------------------------------------
7) CLOSED BLOCK
Summarized financial information for the Closed Block follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------
1998 1997
------------- -------------
(IN MILLIONS)
<S> <C> <C>
Assets
Fixed Maturities:
Available for sale, at estimated fair value (amortized cost,
$4,149.0 and $4,059.4) .......................................... $ 4,373.2 $ 4,231.0
Mortgage loans on real estate ...................................... 1,633.4 1,341.6
Policy loans ....................................................... 1,641.2 1,700.2
Cash and other invested assets ..................................... 86.5 282.0
DAC ................................................................ 676.5 775.2
Other assets ....................................................... 221.6 236.6
---------- ----------
Total Assets ....................................................... $ 8,632.4 $ 8,566.6
========== ==========
Liabilities
Future policy benefits and policyholders' account balances ......... $ 9,013.1 $ 8,993.2
Other liabilities .................................................. 63.9 80.5
---------- ----------
Total Liabilities .................................................. $ 9,077.0 $ 9,073.7
========== ==========
</TABLE>
<TABLE>
<CAPTION>
1998 1997 1996
-------- -------- --------
(IN MILLIONS)
<S> <C> <C> <C>
Revenues
Premiums and other revenue .................................. $ 661.7 $ 687.1 $ 724.8
Investment income (net of investment expenses of $15.5, $27.0
and $27.3) ................................................. 569.7 574.9 546.6
Investment losses, net ...................................... .5 (42.4) (5.5)
-------- -------- --------
Total revenues ............................................. 1,231.9 1,219.6 1,265.9
-------- -------- --------
Benefits and Other Deductions
Policyholders' benefits and dividends ....................... 1,082.0 1,066.7 1,106.3
Other operating costs and expenses .......................... 62.8 50.4 34.6
-------- -------- --------
Total benefits and other deductions ........................ 1,144.8 1,117.1 1,140.9
-------- -------- --------
Contribution from the Closed Block .......................... $ 87.1 $ 102.5 $ 125.0
======== ======== ========
</TABLE>
At December 31, 1998 and 1997, problem mortgage loans on real estate had
an amortized cost of $5.1 million and $8.1 million, respectively, and mortgage
loans on real estate for which the payment terms have been restructured had an
amortized cost of $26.0 million and $70.5 million, respectively.
SAI-89
<PAGE>
- --------------------------------------------------------------------------------
Impaired mortgage loans (as defined under SFAS No. 114) along with the
related provision for losses were as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1998 1997
---------- -----------
(IN MILLIONS)
<S> <C> <C>
Impaired mortgage loans with provision for losses ............ $ 55.5 $ 109.1
Impaired mortgage loans without provision for losses ......... 7.6 .6
------- --------
Recorded investment in impaired mortgages .................... 63.1 109.7
Provision for losses ......................................... (10.1) (17.4)
------- --------
Net Impaired Mortgage Loans .................................. $ 53.0 $ 92.3
======= ========
</TABLE>
During 1998, 1997 and 1996, the Closed Block's average recorded investment
in impaired mortgage loans was $85.5 million, $110.2 million and $153.8
million, respectively. Interest income recognized on these impaired mortgage
loans totaled $4.7 million, $9.4 million and $10.9 million ($1.5 million, $4.1
million and $4.7 million recognized on a cash basis) for 1998, 1997 and 1996,
respectively.
Valuation allowances amounted to $11.1 million and $18.5 million on
mortgage loans on real estate and $15.4 million and $16.8 million on equity
real estate at December 31, 1998 and 1997, 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 and $12.8 million for 1997 and 1996,
respectively. 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 fourth quarter 1997, $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.
SAI-90
<PAGE>
- --------------------------------------------------------------------------------
8) DISCONTINUED OPERATIONS
Summarized financial information for discontinued operations follows:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1998 1997
------------ -----------
(IN MILLIONS)
<S> <C> <C>
Assets
Mortgage loans on real estate ................ $ 553.9 $ 635.2
Equity real estate ........................... 611.0 874.5
Other equity investments ..................... 115.1 209.3
Other invested assets ........................ 24.9 152.4
--------- ---------
Total investments ........................... 1,304.9 1,871.4
Cash and cash equivalents .................... 34.7 106.8
Other assets ................................. 219.0 243.8
--------- ---------
Total Assets ................................. $ 1,558.6 $ 2,222.0
========= =========
Liabilities
Policyholders' liabilities ................... $ 1,021.7 $ 1,048.3
Allowance for future losses .................. 305.1 259.2
Amounts due to continuing operations ......... 2.7 572.8
Other liabilities ............................ 229.1 341.7
--------- ---------
Total Liabilities ............................ $ 1,558.6 $ 2,222.0
========= =========
</TABLE>
<TABLE>
<CAPTION>
1998 1997 1996
-------- -------- --------
(IN MILLIONS)
<S> <C> <C> <C>
Revenues
Investment income (net of investment expenses of $63.3, $97.3
and $127.5) ........................................................... $ 160.4 $ 188.6 $ 245.4
Investment gains (losses), net ......................................... 35.7 (173.7) (18.9)
Policy fees, premiums and other income ................................. (4.3) .2 .2
-------- -------- --------
Total revenues ......................................................... 191.8 15.1 226.7
Benefits and other deductions .......................................... 141.5 169.5 250.4
Earnings added (losses charged) to allowance for future losses ......... 50.3 (154.4) (23.7)
-------- -------- --------
Pre-tax loss from operations ........................................... -- -- --
Pre-tax earnings from releasing (loss from strengthening) of the
allowance for future losses ........................................... 4.2 (134.1) (129.0)
Federal income tax (expense) benefit ................................... (1.5) 46.9 45.2
-------- -------- --------
Earnings (Loss) from Discontinued Operations ........................... $ 2.7 $ (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
SAI-91
<PAGE>
- --------------------------------------------------------------------------------
place in the fourth quarter of each year, investment and benefit cash flow
projections are prepared. These updated assumptions and estimates resulted in a
release of allowance in 1998 and strengthening of allowance in 1997 and 1996.
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 fourth quarter
1997, $92.5 million of writedowns on real estate held for production of income
were recognized.
Benefits and other deductions includes $26.6 million, $53.3 million and
$114.3 million of interest expense related to amounts borrowed from continuing
operations in 1998, 1997 and 1996, respectively.
Valuation allowances amounted to $3.0 million and $28.4 million on
mortgage loans on real estate and $34.8 million and $88.4 million on equity
real estate at December 31, 1998 and 1997, 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, 1998 and 1997, problem mortgage loans on real estate had
amortized costs of $1.1 million and $11.0 million, respectively, and mortgage
loans on real estate for which the payment terms have been restructured had
amortized costs of $3.5 million and $109.4 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,
-----------------------
1998 1997
--------- -----------
(IN MILLIONS)
<S> <C> <C>
Impaired mortgage loans with provision for losses ............ $ 6.7 $ 101.8
Impaired mortgage loans without provision for losses ......... 8.5 .2
------ --------
Recorded investment in impaired mortgages .................... 15.2 102.0
Provision for losses ......................................... (2.1) (27.3)
------ --------
Net Impaired Mortgage Loans .................................. $ 13.1 $ 74.7
====== ========
</TABLE>
During 1998, 1997 and 1996, the discontinued operations' average recorded
investment in impaired mortgage loans was $73.3 million, $89.2 million and
$134.8 million, respectively. Interest income recognized on these impaired
mortgage loans totaled $4.7 million, $6.6 million and $10.1 million ($3.4
million, $5.3 million and $7.5 million recognized on a cash basis) for 1998,
1997 and 1996, respectively.
At December 31, 1998 and 1997, discontinued operations had carrying values
of $50.0 million and $156.2 million, respectively, of real estate acquired in
satisfaction of debt.
SAI-92
<PAGE>
- --------------------------------------------------------------------------------
9) SHORT-TERM AND LONG-TERM DEBT
Short-term and long-term debt consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1998 1997
----------- -----------
(IN MILLIONS)
<S> <C> <C>
Short-term debt ............................................ $ 179.3 $ 422.2
--------- ---------
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 .............. 199.7 199.7
Other ..................................................... .3 .3
--------- ---------
Total Equitable Life .................................... 599.4 599.4
--------- ---------
Wholly Owned and Joint Venture Real Estate:
Mortgage notes, 5.91% -- 12.00%, due through 2017 ......... 392.2 676.6
--------- ---------
Alliance:
Other ..................................................... 10.8 18.5
--------- ---------
Total long-term debt ....................................... 1,002.4 1,294.5
--------- ---------
Total Short-term and Long-term Debt ........................ $ 1,181.7 $ 1,716.7
========= =========
</TABLE>
Short-term Debt
Equitable Life has a $350.0 million bank credit facility available to fund
short-term working capital needs and to facilitate the securities settlement
process. The credit facility consists of two types of borrowing options with
varying interest rates and expires in September 2000. The interest rates are
based on external indices dependent on the type of borrowing and at December
31, 1998 range from 5.23% to 7.75%. There were no borrowings outstanding under
this bank credit facility at December 31, 1998.
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, 1998,
there were no borrowings outstanding under this program.
During July 1998, Alliance entered into a $425.0 million five-year
revolving credit facility with a group of commercial banks which replaced a
$250.0 million revolving credit facility. 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. During September 1998, Alliance increased the size of its commercial
paper program from $250.0 million to $425.0 million. Borrowings from these two
sources may not exceed $425.0 million in the aggregate. The revolving credit
facility provides backup liquidity for commercial paper issued under Alliance's
commercial paper program and can be used as a direct source of borrowing. The
revolving credit facility contains covenants which require Alliance to, among
other things, meet certain financial ratios. As of December 31, 1998, Alliance
had commercial paper outstanding totaling $179.5 million at an effective
interest rate of 5.5% and there were no borrowings outstanding under Alliance's
revolving credit facility.
SAI-93
<PAGE>
- --------------------------------------------------------------------------------
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.
The Company has pledged real estate, mortgage loans, cash and securities
amounting to $640.2 million and $1,164.0 million at December 31, 1998 and 1997,
respectively, as collateral for certain short-term and long-term debt.
At December 31, 1998, aggregate maturities of the long-term debt based on
required principal payments at maturity for 1999 and the succeeding four years
are $322.8 million, $6.9 million, $1.7 million, $1.8 million and $2.0 million,
respectively, and $668.0 million thereafter.
10) FEDERAL INCOME TAXES
A summary of the Federal income tax expense in the consolidated statements
of earnings is shown below:
<TABLE>
<CAPTION>
1998 1997 1996
-------- -------- -------
(IN MILLIONS)
<S> <C> <C> <C>
Federal income tax expense (benefit):
Current ............................ $ 283.3 $ 186.5 $ 97.9
Deferred ........................... 69.8 (95.0) (88.2)
-------- -------- -------
Total ............................... $ 353.1 $ 91.5 $ 9.7
======== ======== =======
</TABLE>
The Federal income taxes attributable to consolidated operations are
different from the amounts determined by multiplying the earnings before
Federal income taxes and minority interest by the expected Federal income tax
rate of 35%. The sources of the difference and the tax effects of each are as
follows:
<TABLE>
<CAPTION>
1998 1997 1996
-------- -------- -------
(IN MILLIONS)
<S> <C> <C> <C>
Expected Federal income tax expense ........... $ 414.3 $ 234.7 $ 73.0
Non-taxable minority interest ................. (33.2) (38.0) (28.6)
Adjustment of tax audit reserves .............. 16.0 (81.7) 6.9
Equity in unconsolidated subsidiaries ......... (39.3) (45.1) (32.3)
Other ......................................... (4.7) 21.6 (9.3)
-------- -------- -------
Federal Income Tax Expense .................... $ 353.1 $ 91.5 $ 9.7
======== ======== =======
</TABLE>
SAI-94
<PAGE>
- --------------------------------------------------------------------------------
The components of the net deferred Federal income taxes are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1998 DECEMBER 31, 1997
--------------------------- --------------------------
ASSETS LIABILITIES ASSETS LIABILITIES
----------- ------------- ----------- ------------
(IN MILLIONS)
<S> <C> <C> <C> <C>
Compensation and related benefits ......... $ 235.3 $ -- $ 257.9 $ --
Other ..................................... 27.8 -- 30.7 --
DAC, reserves and reinsurance ............. -- 231.4 -- 222.8
Investments ............................... -- 364.4 -- 405.7
-------- ------ -------- ------
Total ..................................... $ 263.1 $ 595.8 $ 288.6 $ 628.5
======== ======= ======== =======
</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>
1998 1997 1996
------- -------- --------
(IN MILLIONS)
<S> <C> <C> <C>
DAC, reserves and reinsurance ......................... $ (7.7) $ 46.2 $ (156.2)
Investments ........................................... 46.8 (113.8) 78.6
Compensation and related benefits ..................... 28.6 3.7 22.3
Other ................................................. 2.1 (31.1) (32.9)
------- -------- --------
Deferred Federal Income Tax Expense (Benefit) ......... $ 69.8 $ (95.0) $ (88.2)
======= ======== ========
</TABLE>
The Internal Revenue Service (the "IRS") is in the process of examining
the Holding Company's consolidated Federal income tax returns for the years
1992 through 1996. Management believes these audits will have no material
adverse effect on the Company's results of operations.
SAI-95
<PAGE>
- --------------------------------------------------------------------------------
11) 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>
1998 1997 1996
-------- -------- --------
(IN MILLIONS)
<S> <C> <C> <C>
Direct premiums .................................................... $ 438.8 $ 448.6 $ 461.4
Reinsurance assumed ................................................ 203.6 198.3 177.5
Reinsurance ceded .................................................. (54.3) (45.4) (41.3)
-------- -------- --------
Premiums ........................................................... $ 588.1 $ 601.5 $ 597.6
======== ======== ========
Universal Life and Investment-type Product Policy Fee Income
Ceded ............................................................. $ 75.7 $ 61.0 $ 48.2
======== ======== ========
Policyholders' Benefits Ceded ...................................... $ 85.9 $ 70.6 $ 54.1
======== ======== ========
Interest Credited to Policyholders' Account Balances Ceded ......... $ 39.5 $ 36.4 $ 32.3
======== ======== ========
</TABLE>
Beginning in May 1997, the Company began reinsuring on a yearly renewal
term basis 90% of the mortality risk on new issues of certain term, universal
and variable life products. During 1996, the Company's retention limit on joint
survivorship policies was increased to $15.0 million. Effective January 1,
1994, all in force business above $5.0 million was reinsured. The Insurance
Group also reinsures the entire risk on certain substandard underwriting risks
as well as in certain other cases.
The Insurance Group cedes 100% of its group life and health business to a
third party insurance company. Premiums ceded totaled $1.3 million, $1.6
million and $2.4 million for 1998, 1997 and 1996, respectively. Ceded death and
disability benefits totaled $15.6 million, $4.3 million and $21.2 million for
1998, 1997 and 1996, respectively. Insurance liabilities ceded totaled $560.3
million and $593.8 million at December 31, 1998 and 1997, respectively.
12) 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").
SAI-96
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Components of net periodic pension cost (credit) for the qualified and
non-qualified plans are as follows:
<TABLE>
<CAPTION>
1998 1997 1996
-------- -------- --------
(IN MILLIONS)
<S> <C> <C> <C>
Service cost ........................................... $ 33.2 $ 32.5 $ 33.8
Interest cost on projected benefit obligations ......... 129.2 128.2 120.8
Actual return on assets ................................ (175.6) (307.6) (181.4)
Net amortization and deferrals ......................... 6.1 166.6 43.4
-------- -------- --------
Net Periodic Pension Cost (Credit) ..................... $ (7.1) $ 19.7 $ 16.6
======== ======== ========
</TABLE>
The plan's projected benefit obligation under the qualified and
non-qualified plans was comprised of:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------
1998 1997
------------- -------------
(IN MILLIONS)
<S> <C> <C>
Benefit obligation, beginning of year ......... $ 1,801.3 $ 1,765.5
Service cost .................................. 33.2 32.5
Interest cost ................................. 129.2 128.2
Actuarial (gains) losses ...................... 108.4 (15.5)
Benefits paid ................................. (138.7) (109.4)
---------- ----------
Benefit Obligation, End of Year ............... $ 1,933.4 $ 1,801.3
========== ==========
</TABLE>
The funded status of the qualified and non-qualified pension plans is as
follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------
1998 1997
------------- -------------
(IN MILLIONS)
<S> <C> <C>
Plan assets at fair value, beginning of year .......................... $ 1,867.4 $ 1,626.0
Actual return on plan assets .......................................... 338.9 307.5
Contributions ......................................................... -- 30.0
Benefits paid and fees ................................................ (123.2) (96.1)
---------- ----------
Plan assets at fair value, end of year ................................ 2,083.1 1,867.4
Projected benefit obligations ......................................... 1,933.4 1,801.3
---------- ----------
Projected benefit obligations less than plan assets ................... 149.7 66.1
Unrecognized prior service cost ....................................... (7.5) (9.9)
Unrecognized net loss from past experience different from that assumed 38.7 95.0
Unrecognized net asset at transition .................................. 1.5 3.1
---------- ----------
Prepaid Pension Cost .................................................. $ 182.4 $ 154.3
========== ==========
</TABLE>
The discount rate and rate of increase in future compensation levels used
in determining the actuarial present value of projected benefit obligations
were 7.0% and 3.83%, respectively, at December 31, 1998 and 7.25% and 4.07%,
respectively, at December 31, 1997. As of January 1, 1998 and 1997, the
expected long-term rate of return on assets for the retirement plan was 10.25%.
SAI-97
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The Company recorded, as a reduction of shareholders' equity an additional
minimum pension liability of $28.3 million and $17.3 million, net of Federal
income taxes, at December 31, 1998 and 1997, 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 $31.8 million, $33.2
million and $34.7 million for 1998, 1997 and 1996, 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 1998, 1997 and
1996, the Company made estimated postretirement benefits payments of $28.4
million, $18.7 million and $18.9 million, respectively.
The following table sets forth the postretirement benefits plan's status,
reconciled to amounts recognized in the Company's consolidated financial
statements:
<TABLE>
<CAPTION>
1998 1997 1996
------ ------ ------
(IN MILLIONS)
<S> <C> <C> <C>
Service cost ............................................................ $ 4.6 $ 4.5 $ 5.3
Interest cost on accumulated postretirement benefits obligation ......... 33.6 34.7 34.6
Net amortization and deferrals .......................................... .5 1.9 2.4
------ ------ ------
Net Periodic Postretirement Benefits Costs .............................. $ 38.7 $ 41.1 $ 42.3
====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1998 1997
----------- -----------
(IN MILLIONS)
<S> <C> <C>
Accumulated postretirement benefits obligation, beginning of year ........ $ 490.8 $ 388.5
Service cost ............................................................. 4.6 4.5
Interest cost ............................................................ 33.6 34.7
Contributions and benefits paid .......................................... (28.4) 72.1
Actuarial (gains) losses ................................................. (10.2) (9.0)
-------- --------
Accumulated postretirement benefits obligation, end of year .............. 490.4 490.8
Unrecognized prior service cost .......................................... 31.8 40.3
Unrecognized net loss from past experience different from that assumed
and from changes in assumptions ......................................... (121.2) (140.6)
-------- --------
Accrued Postretirement Benefits Cost ..................................... $ 401.0 $ 390.5
======== ========
</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 medical benefits will be limited to 200% of 1993 costs for
all participants.
SAI-98
<PAGE>
- --------------------------------------------------------------------------------
The assumed health care cost trend rate used in measuring the accumulated
postretirement benefits obligation was 8.0% in 1998, gradually declining to
2.5% in the year 2009, and in 1997 was 8.75%, gradually declining to 2.75% in
the year 2009. The discount rate used in determining the accumulated
postretirement benefits obligation was 7.0% and 7.25% at December 31, 1998 and
1997, respectively.
If the health care cost trend rate assumptions were increased by 1%, the
accumulated postretirement benefits obligation as of December 31, 1998 would be
increased 4.83%. The effect of this change on the sum of the service cost and
interest cost would be an increase of 4.57%. If the health care cost trend rate
assumptions were decreased by 1% the accumulated postretirement benefits
obligation as of December 31, 1998 would be decreased by 5.6%. The effect of
this change on the sum of the service cost and interest cost would be a
decrease of 5.4%.
13) 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, 1998 and 1997, respectively, was $880.9
million and $1,353.4 million. The average unexpired terms at December 31, 1998
ranged from 1 month to 4.3 years. At December 31, 1998, the cost of terminating
swaps in a loss position was $8.0 million. Equitable Life has implemented an
interest rate cap program designed to hedge crediting rates on
interest-sensitive individual annuities contracts. The outstanding notional
amounts at December 31, 1998 of contracts purchased and sold were $8,450.0
million and $875.0 million, respectively. The net premium paid by Equitable
Life on these contracts was $54.8 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
SAI-99
<PAGE>
- --------------------------------------------------------------------------------
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, 1998 and 1997.
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.
Fair values for long-term debt are 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.
SAI-100
<PAGE>
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The following table discloses carrying value and estimated fair value for
financial instruments not otherwise disclosed in Notes 3, 7 and 8:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------------------------------
1998 1997
---------------------------- -----------------------------
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 ........................ $ 2,809.9 $ 2,961.8 $ 2,611.4 $ 2,822.8
Other limited partnership interests .................. 562.6 562.6 509.4 509.4
Policy loans ......................................... 2,086.7 2,370.7 2,422.9 2,493.9
Policyholders' account balances - investment contracts 12,892.0 13,396.0 12,611.0 12,714.0
Long-term debt ....................................... 1,002.4 1,025.2 1,294.5 1,257.0
Closed Block Financial Instruments:
Mortgage loans on real estate ........................ 1,633.4 1,703.5 1,341.6 1,420.7
Other equity investments ............................. 56.4 56.4 86.3 86.3
Policy loans ......................................... 1,641.2 1,929.7 1,700.2 1,784.2
SCNILC liability ..................................... 25.0 25.0 27.6 30.3
Discontinued Operations Financial Instruments:
Mortgage loans on real estate ........................ 553.9 599.9 655.5 779.9
Fixed maturities ..................................... 24.9 24.9 38.7 38.7
Other equity investments ............................. 115.1 115.1 209.3 209.3
Guaranteed interest contracts ........................ 37.0 34.0 37.0 34.0
Long-term debt ....................................... 147.1 139.8 296.4 297.6
</TABLE>
14) 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 $142.9 million to affiliated real estate joint ventures;
and to provide equity financing to certain limited partnerships of $287.3
million at December 31, 1998, 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 $24.7 million of letters of credit outstanding at
December 31, 1998.
SAI-101
<PAGE>
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15) LITIGATION
Major Medical Insurance Cases
Equitable Life agreed to settle, subject to court approval, previously
disclosed cases involving lifetime guaranteed renewable major medical insurance
policies issued by Equitable Life in five 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. In certain
cases plaintiffs also claimed that Equitable Life misrepresented to
policyholders that premium increases had been approved by insurance
departments, and that it determined annual rate increases in a manner that
discriminated against the policyholders.
In December 1997, Equitable Life entered into a settlement agreement,
subject to court approval, which would result in creation of a nationwide class
consisting of all persons holding, and paying premiums on, the policies at any
time since January 1, 1988 and the dismissal with prejudice of the pending
actions and the resolution of all similar claims on a nationwide basis. Under
the terms of the settlement, which involves approximately 127,000 former and
current policyholders, Equitable Life would pay $14.2 million in exchange for
release of all claims and will provide future relief to certain current
policyholders by restricting future premium increases, estimated to have a
present value of $23.3 million. This estimate is based upon assumptions about
future events that cannot be predicted with certainty and accordingly the
actual value of the future relief may vary. In October 1998, the court entered
a judgment approving the settlement agreement and, in November, a member of the
national class filed a notice of appeal of the judgment. In January 1999, the
Court of Appeals granted Equitable Life's motion to dismiss the appeal.
Life Insurance and Annuity Sales Cases
A number of lawsuits are pending as individual claims and purported class
actions against Equitable Life and its subsidiary insurance companies Equitable
Variable Life Insurance Company ("EVLICO," which was merged into Equitable Life
effective January 1, 1997) and The Equitable of Colorado, Inc. ("EOC"). These
actions involve, among other things, sales of life and annuity products for
varying periods from 1980 to the present, and allege, among other things, sales
practice misrepresentation primarily involving: the number of premium payments
required; the propriety of a product as an investment vehicle; the propriety of
a product as a replacement of an existing policy; and failure to disclose a
product as life insurance. Some actions are in state courts and others are in
U.S. District Courts in varying jurisdictions, and are in varying stages of
discovery and motions for class certification.
In general, the plaintiffs request an unspecified amount of damages,
punitive damages, enjoinment from the described practices, prohibition against
cancellation of policies for non-payment of premium or other remedies, as well
as attorneys' fees and expenses. Similar actions have been filed against other
life and health insurers and have resulted in the award of substantial
judgments, including material amounts of punitive damages, or in substantial
settlements. Although the outcome of litigation cannot be predicted with
certainty, particularly in the early stages of an action, The Equitable's
management believes that the ultimate resolution of these cases should not have
a material adverse effect on the financial position of The Equitable. The
Equitable'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
Equitable's results of operations in any particular period.
Discrimination Case
Equitable Life is a defendant in an action, certified as a class action in
September 1997, in the United States District Court for the Northern District
of Alabama, Southern Division, involving alleged discrimination on the basis of
race against African-American applicants and potential applicants in hiring
SAI-102
<PAGE>
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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 litigation cannot be
predicted with certainty, The Equitable's management believes that the ultimate
resolution of this matter should not have a material adverse effect on the
financial position of The Equitable. The Equitable'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 Equitable's results of operations in any
particular period.
Alliance Capital
In July 1995, a class action 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
original complaint was dismissed in 1996; on appeal, the dismissal was
affirmed. In October 1996, plaintiffs filed a motion for leave to file an
amended complaint, alleging the Fund failed to hedge against currency risk
despite representations that it would do so, the Fund did not properly disclose
that it planned to invest in mortgage-backed derivative securities and two Fund
advertisements misrepresented the risks of investing in the Fund. In October
1998, the U.S. Court of Appeals for the Second Circuit issued an order granting
plaintiffs' motion to file an amended complaint alleging that the Fund
misrepresented its ability to hedge against currency risk and denying
plaintiffs' motion to file an amended complaint containing the other
allegations. Alliance believes that the allegations in the amended complaint,
which was filed in February 1999, are without merit and intends to defend
itself vigorously against these claims. While the ultimate outcome of this
matter cannot be determined at this time, Alliance's management does not expect
that it will have a material adverse effect on Alliance's results of operations
or financial condition.
DLJSC
DLJSC is a defendant along with certain other parties in a class action
complaint involving the underwriting of units, consisting of notes and warrants
to purchase common shares, of Rickel Home Centers, Inc. ("Rickel"), which filed
a voluntary petition for reorganization pursuant to Chapter 11 of the
Bankruptcy Code. The complaint seeks unspecified compensatory and punitive
damages from DLJSC, as an underwriter and as an owner of 7.3% of the common
stock, for alleged violation of Federal securities laws and common law fraud
for alleged misstatements and omissions contained in the prospectus and
registration statement used in the offering of the units. DLJSC is defending
itself vigorously against all the allegations contained in the complaint.
Although there can be no assurance, DLJ's management does not believe that the
ultimate outcome of this litigation will have a material adverse effect on
DLJ's consolidated financial condition. Due to the early stage of this
litigation, based on the information currently available to it, DLJ's
management cannot predict whether or not such litigation will have a material
adverse effect on DLJ's results of operations in any particular period.
DLJSC is a defendant in a purported class action filed in a Texas State
Court on behalf of the holders of $550 million principal amount of subordinated
redeemable discount debentures of National Gypsum Corporation ("NGC"). The
debentures were canceled in connection with a Chapter 11 plan of reorganization
for NGC consummated in July 1993. The litigation seeks compensatory and
punitive damages for DLJSC's activities as financial advisor to NGC in the
course of NGC's Chapter 11 proceedings. Trial is expected in early May 1999.
DLJSC intends to defend itself vigorously against all the allegations contained
in the complaint. Although there can be no assurance, DLJ's management does not
believe that the
SAI-103
<PAGE>
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ultimate outcome of this litigation will have a material adverse effect on
DLJ's consolidated financial condition. Based upon the information currently
available to it, DLJ's management cannot predict whether or not such litigation
will have a material adverse effect on DLJ's results of operations in any
particular period.
DLJSC is a defendant in a complaint which alleges that DLJSC and a number
of other financial institutions and several individual defendants violated
civil provisions of RICO by inducing plaintiffs to invest over $40 million in
The Securities Groups, a number of tax shelter limited partnerships, during the
years 1978 through 1982. The plaintiffs seek recovery of the loss of their
entire investment and an approximately equivalent amount of tax-related
damages. Judgment for damages under RICO are subject to trebling. Discovery is
complete. Trial has been scheduled for May 17, 1999. DLJSC believes that it has
meritorious defenses to the complaints and will continue to contest the suits
vigorously. Although there can be no assurance, DLJ's management does not
believe that the ultimate outcome of this litigation will have a material
adverse effect on DLJ's consolidated financial condition. Based upon the
information currently available to it, DLJ's management cannot predict whether
or not such litigation will have a material adverse effect on DLJ's results of
operations in any particular period.
DLJSC is a defendant along with certain other parties in four actions
involving Mid-American Waste Systems, Inc. ("Mid-American"), which filed a
voluntary petition for reorganization pursuant to Chapter 11 of the Bankruptcy
Code in January 1997. Three actions seek rescission, compensatory and punitive
damages for DLJSC's role in underwriting notes of Mid-American. The other
action, filed by the Plan Administrator for the bankruptcy estate of
Mid-American, alleges that DLJSC is liable as an underwriter for alleged
misrepresentations and omissions in the prospectus for the notes, and liable as
financial advisor to Mid-American for allegedly failing to advise Mid-American
about its financial condition. DLJSC believes that it has meritorious defenses
to the complaints and will continue to contest the suits vigorously. Although
there can be no assurance, DLJ's management does not believe that the ultimate
outcome of this litigation will have a material adverse effect on DLJ's
consolidated financial condition. Based upon information currently available to
it, DLJ's management cannot predict whether or not such litigation will have a
material adverse effect on DLJ's results of operations in any particular
period.
Other Matters
In addition to the matters described above, the Holding Company 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.
16) 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 1999 and the
succeeding four years are $98.7 million, $92.7 million, $73.4 million, $59.9
million, $55.8 million and $550.1 million thereafter. Minimum future sublease
rental income on these noncancelable leases for 1999 and the succeeding four
years is $7.6 million, $5.6 million, $4.6 million, $2.3 million, $2.3 million
and $25.4 million thereafter.
At December 31, 1998, the minimum future rental income on noncancelable
operating leases for wholly owned investments in real estate for 1999 and the
succeeding four years is $189.2 million, $177.0 million, $165.5 million, $145.4
million, $122.8 million and $644.7 million thereafter.
SAI-104
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17) OTHER OPERATING COSTS AND EXPENSES
Other operating costs and expenses consisted of the following:
<TABLE>
<CAPTION>
1998 1997 1996
--------- --------- ---------
(IN MILLIONS)
<S> <C> <C> <C>
Compensation costs ................................. $ 772.0 $ 721.5 $ 704.8
Commissions ........................................ 478.1 409.6 329.5
Short-term debt interest expense ................... 26.1 31.7 8.0
Long-term debt interest expense .................... 84.6 121.2 137.3
Amortization of policy acquisition costs ........... 292.7 287.3 405.2
Capitalization of policy acquisition costs ......... (609.1) (508.0) (391.9)
Rent expense, net of sublease income ............... 100.0 101.8 113.7
Cursitor intangible assets writedown ............... -- 120.9 --
Other .............................................. 1,056.8 917.9 769.1
--------- --------- ---------
Total .............................................. $ 2,201.2 $ 2,203.9 $ 2,075.7
========= ========= =========
</TABLE>
During 1997 and 1996, the Company restructured certain operations in
connection with cost reduction programs and recorded pre-tax provisions of
$42.4 million and $24.4 million, respectively. The amounts paid during 1998,
associated with cost reduction programs, totaled $22.6 million. At December 31,
1998, the liabilities associated with cost reduction programs amounted to $39.4
million. The 1997 cost reduction program included 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. Amortization of DAC in 1996 included a $145.0 million writeoff
of DAC related to DI contracts.
18) 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 1998, 1997 and 1996, statutory net income (loss) totaled $384.4 million,
$(351.7) million and $(351.1) million, respectively. Statutory surplus, capital
stock and Asset Valuation Reserve ("AVR") totaled $4,728.0 million and $3,907.1
million at December 31, 1998 and 1997, respectively. No dividends have been
paid by Equitable Life to the Holding Company to date.
At December 31, 1998, the Insurance Group, in accordance with various
government and state regulations, had $25.6 million of securities deposited
with such government or state agencies.
The differences between statutory surplus and capital stock determined in
accordance with Statutory Accounting Principles ("SAP") and total shareholders'
equity on a GAAP basis are primarily attributable to: (a) inclusion in SAP of
an AVR intended to stabilize surplus from fluctuations in the value of the
investment portfolio; (b) future policy benefits and policyholders' account
balances under SAP differ from GAAP due to differences between actuarial
assumptions and reserving methodologies; (c) certain policy acquisition costs
are expensed under SAP but deferred under GAAP and amortized over future
periods to achieve a matching of revenues and expenses; (d) Federal income
taxes are generally accrued under SAP based upon revenues and expenses in the
Federal income tax return while under GAAP deferred taxes are provided for
timing differences between recognition of revenues and expenses for financial
reporting and income tax purposes; (e) valuation of assets under SAP and GAAP
differ due to different investment
SAI-105
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valuation and depreciation methodologies, as well as the deferral of
interest-related realized capital gains and losses on fixed income investments;
and (f) differences in the accrual methodologies for post-employment and
retirement benefit plans.
19) BUSINESS SEGMENT INFORMATION
The Company's operations consist of Insurance and Investment Services. The
Company's management evaluates the performance of each of these segments
independently and allocates resources based on current and future requirements
of each segment. Management evaluates the performance of each segment based
upon operating results adjusted to exclude the effect of unusual or
non-recurring events and transactions and certain revenue and expense
categories not related to the base operations of the particular business net of
minority interest. Information for all periods is presented on a comparable
basis.
Intersegment investment advisory and other fees of approximately $61.8
million, $84.1 million and $129.2 million for 1998, 1997 and 1996,
respectively, are included in total revenues of the Investment Services
segment. These fees, excluding amounts related to discontinued operations of
$.5 million, $4.2 million and $13.3 million for 1998, 1997 and 1996,
respectively, are eliminated in consolidation.
The following tables reconcile each segment's revenues and operating
earnings to total revenues and earnings from continuing operations before
Federal income taxes and cumulative effect of accounting change as reported on
the consolidated statements of earnings and the segments' assets to total
assets on the consolidated balance sheets, respectively.
SAI-106
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT
INSURANCE SERVICES ELIMINATION TOTAL
---------- ---------- ------- ----------
(IN MILLIONS)
<S> <C> <C> <C> <C>
1998
Segment revenues ....................................... $ 4,029.8 $ 1,438.4 $ (5.7) $ 5,462.5
Investment gains ....................................... 64.8 35.4 -- 100.2
---------- ---------- ------- ----------
Total Revenues ......................................... $ 4,094.6 $ 1,473.8 $ (5.7) $ 5,562.7
========== ========== ======= ==========
Pre-tax operating earnings ............................. $ 688.6 $ 284.3 $ -- $ 972.9
---------- ---------- ------- ----------
Investment gains, net of DAC and other charges ......... 41.7 27.7 -- 69.4
Pre-tax minority interest .............................. -- 141.5 -- 141.5
---------- ---------- ------- ----------
Earnings from Continuing Operations .................... $ 730.3 $ 453.5 $ -- $ 1,183.8
========== ========== ======= ==========
Total Assets ........................................... $ 75,626.0 $ 12,379.2 $ (64.4) $ 87,940.8
========== ========== ======= ==========
1997
Segment revenues ....................................... $ 3,990.8 $ 1,200.0 $ (7.7) $ 5,183.1
Investment gains (losses) .............................. (318.8) 255.1 -- (63.7)
---------- ---------- ------- ----------
Total Revenues ......................................... $ 3,672.0 $ 1,455.1 $ (7.7) $ 5,119.4
========== ========== ======= ==========
Pre-tax operating earnings ............................. $ 507.0 $ 258.3 $ -- $ 765.3
Investment gains (losses), net of DAC and other
charges ............................................... (292.5) 252.7 -- (39.8)
Non-recurring costs and expenses ....................... (41.7) (121.6) -- (163.3)
Pre-tax minority interest .............................. -- 108.5 -- 108.5
---------- ---------- ------- ----------
Earnings from Continuing Operations .................... $ 172.8 $ 497.9 $ -- $ 670.7
========== ========== ======= ==========
Total Assets ........................................... $ 67,762.4 $ 13,691.4 $ (96.1) $ 81,357.7
========== ========== ======= ==========
1996
Segment revenues ....................................... $ 3,789.1 $ 1,105.5 $ (12.6) $ 4,882.0
Investment gains (losses) .............................. (30.3) 20.5 -- (9.8)
---------- ---------- ------- ----------
Total Revenues ......................................... $ 3,758.8 $ 1,126.0 $ (12.6) $ 4,872.2
========== ========== ======= ==========
Pre-tax operating earnings ............................. $ 337.1 $ 224.6 $ -- $ 561.7
Investment gains (losses), net of DAC and other
charges ............................................... (37.2) 16.9 -- (20.3)
Reserve strengthening and DAC writeoff ................. (393.0) -- -- (393.0)
Non-recurring costs and expenses ....................... (22.3) (1.1) -- (23.4)
Pre-tax minority interest .............................. -- 83.6 -- 83.6
---------- ---------- ------- ----------
Earnings (Loss) from Continuing Operations ............. $ (115.4) $ 324.0 $ -- $ 208.6
=========== ========== ======= ==========
</TABLE>
SAI-107
<PAGE>
- --------------------------------------------------------------------------------
20) QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The quarterly results of operations for 1998 and 1997 are summarized
below:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
-------- ------- ------------ -----------
(IN MILLIONS)
<S> <C> <C> <C> <C>
1998
Total Revenues ............................... $ 1,470.2 $ 1,422.9 $ 1,297.6 $ 1,372.0
========= ========= ========= =========
Earnings from Continuing Operations before
Cumulative Effect of Accounting Change ...... $ 212.8 $ 197.0 $ 136.8 $ 158.9
========= ========= ========= =========
Net Earnings ................................. $ 213.3 $ 198.3 $ 137.5 $ 159.1
========= ========= ========= =========
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)
========= ========= ========= ==========
</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.
21) INVESTMENT IN DLJ
At December 31, 1998, the Company's ownership of DLJ interest was
approximately 32.5%. 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.
SAI-108
<PAGE>
- --------------------------------------------------------------------------------
Summarized balance sheets information for DLJ, reconciled to the Company's
carrying value of DLJ, are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------
1998 1997
-------------- --------------
(IN MILLIONS)
<S> <C> <C>
Assets:
Trading account securities, at market value ........................ $ 13,195.1 $ 16,535.7
Securities purchased under resale agreements ....................... 20,063.3 22,628.8
Broker-dealer related receivables .................................. 34,264.5 28,159.3
Other assets ....................................................... 4,759.3 3,182.0
----------- -----------
Total Assets ....................................................... $ 72,282.2 $ 70,505.8
=========== ===========
Liabilities:
Securities sold under repurchase agreements ........................ $ 35,775.6 $ 36,006.7
Broker-dealer related payables ..................................... 26,161.5 26,127.2
Short-term and long-term debt ...................................... 3,997.6 3,249.5
Other liabilities .................................................. 3,219.8 2,860.9
----------- -----------
Total liabilities .................................................. 69,154.5 68,244.3
DLJ's company-obligated mandatorily redeemed preferred securities of
subsidiary trust holding solely debentures of DLJ ................. 200.0 200.0
Total shareholders' equity ......................................... 2,927.7 2,061.5
----------- -----------
Total Liabilities, Cumulative Exchangeable Preferred Stock and
Shareholders' Equity .............................................. $ 72,282.2 $ 70,505.8
=========== ===========
DLJ's equity as reported ........................................... $ 2,927.7 $ 2,061.5
Unamortized cost in excess of net assets acquired in 1985 and other
adjustments ....................................................... 23.7 23.5
The Holding Company's equity ownership in DLJ ...................... (1,002.4) (740.2)
Minority interest in DLJ ........................................... (1,118.2) (729.3)
----------- -----------
The Company's Carrying Value of DLJ ................................ $ 830.8 $ 615.5
=========== ===========
</TABLE>
SAI-109
<PAGE>
- --------------------------------------------------------------------------------
Summarized statements of earnings information for DLJ reconciled to the
Company's equity in earnings of DLJ is as follows:
<TABLE>
<CAPTION>
1998 1997
---------- ----------
(IN MILLIONS)
<S> <C> <C>
Commission, fees and other income ..................................... $ 3,184.7 $ 2,430.7
Net investment income ................................................. 2,189.1 1,652.1
Dealer, trading and investment gains, net ............................. 33.2 557.7
---------- ----------
Total revenues ........................................................ 5,407.0 4,640.5
Total expenses including income taxes ................................. 5,036.2 4,232.2
---------- ----------
Net earnings .......................................................... 370.8 408.3
Dividends on preferred stock .......................................... 21.3 12.2
---------- ----------
Earnings Applicable to Common Shares .................................. $ 349.5 $ 396.1
========== ==========
DLJ's earnings applicable to common shares as reported ................ $ 349.5 $ 396.1
Amortization of cost in excess of net assets acquired in 1985 ......... (.8) (1.3)
The Holding Company's equity in DLJ's earnings ........................ (136.8) (156.8)
Minority interest in DLJ .............................................. (99.5) (109.1)
---------- ----------
The Company's Equity in DLJ's Earnings ................................ $ 112.4 $ 128.9
========== ==========
</TABLE>
22) 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 1998, 1997 and
1996 would have been:
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
(IN MILLIONS)
<S> <C> <C> <C>
Net Earnings:
As reported ......... $ 708.2 $ 437.2 $ 10.3
Pro forma ........... 678.4 426.3 3.3
</TABLE>
SAI-110
<PAGE>
- --------------------------------------------------------------------------------
The fair values of options granted after December 31, 1994, used as a
basis for the above pro forma disclosures, were estimated as of the dates of
grant using the Black-Scholes option pricing model. The option pricing
assumptions for 1998, 1997 and 1996 are as follows:
<TABLE>
<CAPTION>
HOLDING COMPANY DLJ
-------------------------------- --------------------------------
1998 1997 1996 1998 1997 1996
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Dividend yield .................. 0.32% 0.48% 0.80% 0.69% 0.86% 1.54%
Expected volatility ............. 28% 20% 20% 40% 33% 25%
Risk-free interest rate ......... 5.48% 5.99% 5.92% 5.53% 5.96% 6.07%
Expected life in years .......... 5 5 5 5 5 5
Weighted average fair
value per option at
grant-date ..................... $ 22.64 $ 12.25 $ 6.94 $ 16.27 $ 10.81 $ 4.03
<CAPTION>
ALLIANCE
--------------------------------
1998 1997 1996
---------- ---------- ----------
<S> <C> <C> <C>
Dividend yield .................. 6.50% 8.00% 8.00%
Expected volatility ............. 29% 26% 23%
Risk-free interest rate ......... 4.40% 5.70% 5.80%
Expected life in years .......... 7.2 7.2 7.4
Weighted average fair
value per option at
grant-date ..................... $ 3.86 $ 2.18 $ 1.35
</TABLE>
A summary of the Holding Company, DLJ and Alliance's option plans is as
follows:
<TABLE>
<CAPTION>
HOLDING COMPANY DLJ ALLIANCE
----------------------------- ----------------------------- ----------------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
PRICE OF PRICE OF PRICE OF
SHARES OPTIONS SHARES OPTIONS UNITS OPTIONS
(IN MILLIONS) OUTSTANDING (IN MILLIONS) OUTSTANDING (IN MILLIONS) OUTSTANDING
--------------- ------------- --------------- ------------- --------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Balance as of January 1, 1996 ........... 6.7 $ 20.27 18.4 $ 13.50 9.6 $ 8.86
Granted ................................ .7 $ 24.94 4.2 $ 16.27 1.4 $ 12.56
Exercised .............................. (.1) $ 19.91 -- -- (.8) $ 6.82
Expired ................................ -- -- --
Forfeited .............................. (.6) $ 20.21 (.4) $ 13.50 (.2) $ 9.66
----- ----- -----
Balance as of December 31, 1996 ......... 6.7 $ 20.79 22.2 $ 14.03 10.0 $ 9.54
Granted ................................ 3.2 $ 41.85 6.4 $ 30.54 2.2 $ 18.28
Exercised .............................. (1.6) $ 20.26 (.2) $ 16.01 (1.2) $ 8.06
Forfeited .............................. (.4) $ 23.43 (.2) $ 13.79 (.4) $ 10.64
----- ----- -----
Balance as of December 31, 1997 ......... 7.9 $ 29.05 28.2 $ 17.78 10.6 $ 11.41
Granted ................................ 4.3 $ 66.26 1.5 $ 38.59 2.8 $ 26.28
Exercised .............................. (1.1) $ 21.18 (1.4) $ 14.91 (.9) $ 8.91
Forfeited .............................. (.4) $ 47.01 (.1) $ 17.31 (.2) $ 13.14
----- ----- -----
Balance as of December 31, 1998 ......... 10.7 $ 44.00 28.2 $ 19.04 12.3 $ 14.94
===== ===== =====
</TABLE>
SAI-111
<PAGE>
- --------------------------------------------------------------------------------
Information about options outstanding and exercisable at December 31, 1998
is as follows:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
--------------------------------------------- -----------------------------
WEIGHTED
AVERAGE WEIGHTED WEIGHTED
RANGE OF NUMBER REMAINING AVERAGE NUMBER AVERAGE
EXERCISE OUTSTANDING CONTRACTUAL EXERCISE EXERCISABLE EXERCISE
PRICES (IN MILLIONS) LIFE (YEARS) PRICE (IN MILLIONS) PRICE
------ ------------- ------------ ----- ------------- -----
<S> <C> <C> <C> <C> <C>
HOLDING
COMPANY
-------
$18.125-$27.75 ......... 3.7 5.19 $ 20.97 3.0 $ 20.33
$28.50 -$45.25 ......... 3.0 8.68 $ 41.79 --
$50.63 -$66.75 ......... 2.1 9.21 $ 52.73 --
$81.94 -$82.56 ......... 1.9 9.62 $ 82.56 --
---- ----
$18.125-$82.56 ......... 10.7 7.75 $ 44.00 3.0 $ 20.33
==== ==== ======= ==== =======
DLJ
---
$13.50-$25.99 .......... 22.3 7.1 $ 14.59 21.4 $ 15.05
$26.00-$38.99 .......... 5.0 8.8 $ 33.94 --
$39.00-$52.875 ......... .9 9.4 $ 44.65 --
---- ----
$13.50-$52.875 ......... 28.2 7.5 $ 19.04 21.4 $ 15.05
==== ==== ======= ==== =======
ALLIANCE
--------
$ 3.03-$ 9.69 .......... 3.1 4.5 $ 8.03 2.4 $ 7.57
$ 9.81-$10.69 .......... 2.0 5.3 $ 10.05 1.6 $ 10.07
$11.13-$13.75 .......... 2.4 7.5 $ 11.92 1.0 $ 11.77
$18.47-$18.78 .......... 2.0 9.0 $ 18.48 .4 $ 18.48
$22.50-$26.31 .......... 2.8 9.9 $ 26.28 -- --
---- ----
$ 3.03-$26.31 .......... 12.3 7.2 $ 14.94 5.4 $ 9.88
==== ==== ======= ==== =======
</TABLE>
SAI-112
<PAGE>
Supplement dated May 1, 1999 to Prospectus dated May 1, 1999
------------------------------------------------------------------------
MEMBERS RETIREMENT PROGRAMS
funded under contracts with
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
1290 Avenue of the Americas, New York, New York 10104
Toll-Free Telephone 800-223-5790
----------------------------------
VARIABLE ANNUITY BENEFITS
----------------------------------
This Prospectus Supplement should be read and retained for
future reference by Participants in the Members Retirement
Programs who are considering variable
annuity payment benefits after retirement.
This Prospectus Supplement is not authorized for
distribution unless accompanied or preceded by
the Prospectus dated May 1, 1999 for the
appropriate Members Retirement Program.
- ------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS: ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- ------------------------------------------------------------------------------
<PAGE>
RETIREMENT BENEFITS
When you become eligible to receive benefits under a Members
Retirement Program, you may select one or more of the following forms of
distribution, which are available in variable or fixed form. The law requires
that if the value of your Account Balance is more than $5,000, you must receive
a Qualified Joint and Survivor Annuity unless your Spouse consents to a
different election.
Life Annuity - annuity providing monthly payments for your life. No
payments will be made after your death, even if you have received only one
payment.
Life Annuity Period Certain - an annuity providing monthly payments
for your life or, if longer, a specified period of time. If you die before the
end of that specified period, payments will continue to your beneficiary until
the end of the period. Subject to legal limitations, you may specify a minimum
payment period of 5, 10, 15 or 20 years; the longer the specified period, the
smaller the monthly payments will be.
Joint and Survivor Annuity - Period Certain - an annuity providing
monthly payments for your life and that of your beneficiary or, if longer, a
specified period of time. If you and your beneficiary both die before the end
of the specified period, payments will continue to your contingent beneficiary
until the end of the period. Subject to legal limitations, you may specify a
minimum payment period of 5, 10, 15 or 20 years; the longer the specified
period, the smaller the monthly payments will be.
How Annuity Payments are Made
When your distribution of benefits under an annuity begins, your Units
in the Funds are redeemed. Part or all of the proceeds, plus part or all of
your Account Balance in the General Account Options, may be used to purchase an
annuity. The minimum amount that can be used to purchase any type of annuity is
$5,000. Usually, a $350 charge will be deducted from the amount used to
purchase the annuity to reimburse us for administrative expenses associated
with processing the application and with issuing each month's annuity payment.
Applicable premium taxes will also be deducted.
Annuity payments may be fixed or variable.
FIXED ANNUITY PAYMENTS. Fixed annuity payments are determined from our
annuity rate tables in effect at the time the first annuity payment is
made. The minimum amount of the fixed payments is determined from
tables in our contract with the Trustees, which show the amount of
proceeds necessary to purchase each $1 of monthly annuity payments
(after deduction of any applicable taxes and the annuity
administrative charge). These tables are designed to determine the
amounts required to pay for the annuity selected, taking into account
our administrative and investment expenses and mortality and expense
risks. The size of your payment will depend upon the form of annuity
chosen, your age and the
2
<PAGE>
age of your beneficiary if you select a joint and survivor annuity.
If our current group annuity rates for payment of proceeds would
produce a larger payment, those rates will apply instead of the
minimums in the contract tables. If we give any group pension client
with a qualified plan a better annuity rate than those currently
available for the Program, we will also make those rates available to
Program participants. The annuity administrative charge may be
greater than $350 in that case. Under our contract with the Trustees,
we may change the tables but not more frequently than once every five
years. Fixed annuity payments will not fluctuate during the payment
period.
VARIABLE ANNUITY PAYMENTS. Variable annuity payments are funded
through our Separate Account No. 4 (Pooled) (the "Fund"), through the
purchase of Annuity Units. The number of Annuity Units purchased is
equal to the amount of the first annuity payment divided by the
Annuity Unit Value for the due date of the first annuity payment. The
amount of the first annuity payment is determined in the same manner
for a variable annuity as it is for a fixed annuity. The number of
Annuity Units stays the same throughout the payment period for the
variable annuity but the Annuity Unit Value changes to reflect the
investment income and the realized and unrealized capital gains and
losses of the Fund, after adjustment for an assumed base rate of
return of 5-3/4%, described below.
The amounts of variable annuity payments are determined as follows:
Payments normally start as of the first day of the second calendar month
following our receipt of the proper forms. The first two monthly payments are
the same.
Payments after the first two will vary according to the investment
performance of the Fund. Each monthly payment will be calculated by multiplying
the number of Annuity Units credited to you by the Annuity Unit Value for the
first business day of the calendar month before the due date of the payment.
The Annuity Unit Value was set at $1.1553 as of July 1, 1969, the
first day that Separate Account No. 4 (Pooled) was operational. For any month
after that date, it is the Annuity Unit Value for the preceding month
multiplied by the change factor for the current month. The change factor gives
effect to the assumed annual base rate of return of 4-3/4% and to the actual
investment experience of the Fund.
Because of the adjustment for the assumed base rate of return, the
Annuity Unit Value rises and falls depending on whether the actual rate of
investment return is higher or lower than 5-3/4%.
Illustration of Changes in Annuity Payments. To show how we determine
variable annuity payments from month to month, assume that the amount you
applied to purchase an annuity is enough to fund an annuity with a monthly
payment of $363 and that the Annuity Unit Value for the due date of the first
annuity payment is $1.05. The number of annuity units credited under your
certificate would be 345.71 (363 divided by 1.05 = 345.71). If the
3
<PAGE>
third monthly payment is due on March 1, and the Annuity Unit Value for
February was $1.10, the annuity payment for March would be the number of units
(345.71) times the Annuity Unit Value ($1.10), or $380.28. If the Annuity Unit
Value was $1.00 on March 1, the annuity payment for April would be 345.71 times
$1.00 or $345.71.
Summary of Annuity Unit Values for the Fund
This table shows the Annuity Unit Values with an assumed based rate of
return of 5-3/4%.
First Business Day of Annuity Unit Value
--------------------- ------------------
October 1987 $4.3934
October 1988 $3.5444
October 1989 $4.8357
October 1990 $3.8569
October 1991 $5.4677
October 1992 $5.1818
October 1993 $6.3886
October 1994 $6.1563
October 1995 $7.4970
October 1996 $8.0828
October 1997 $11.0300
October 1998 $7.5963
THE FUND
The Fund (Separate Account No. 4 (Pooled)) was established pursuant to
the Insurance law of the State of New York in 1969. It is an investment account
used to fund benefits under group annuity contracts and other agreements for
tax-deferred retirement programs administered by us.
For a full description of the Fund, its investment policies, the risks
of an investment in the Fund and information relating to the valuation of Fund
assets, see the description of the Fund in our May 1, 1999 prospectus and the
Statement of Additional Information.
INVESTMENT MANAGER
The Manager
We, Equitable Life, act as Investment Manager to the Fund. As such, we
have complete discretion over Fund assets and we invest and reinvest these
assets in accordance with the investment policies described in our May 1, 1999
prospectus and Statement of Additional Information.
4
<PAGE>
We are a New York stock life insurance company with our Home Office at
1290 Avenue of the Americas, New York, New York 10104. Founded in 1859, we are
one of the largest insurance companies in the United States. Equitable Life,
our sole stockholder Equitable Companies, Inc., and their subsidiaries managed
assets of approximately $347.5 billion as of December 31, 1998, including third
party assets of $262.5 billion.
Investment Management
In providing investment management to the Fund, we currently use the
personnel and facilities of our majority owned subsidiary, Alliance Capital
Management L.P. ("Alliance"), for portfolio selection and transaction services.
For a description of Alliance, see our May 1, 1999 Members Retirement Program
prospectus.
Fund Transactions
The Fund is charged for securities brokers commissions, transfer taxes
and other fees relating to securities transactions. Transactions in equity
securities for the Fund are executed primarily through brokers which are
selected by Alliance/Equitable Life and receive commissions paid by the Fund.
For 1998, 1997 and 1996, the Fund paid $4,288,187, $3,698,148 and $5,682,578,
respectively, in brokerage commissions. For a full description of our policies
relating to the selection of brokers, see the description of the fund in our
May 1, 1999 Statement of Additional Information.
5
<PAGE>
FINANCIAL STATEMENTS
The financial statements of the Fund reflect applicable fees,
charges and other expenses under the Members Retirement Programs as in effect
during the periods covered, as well as the charges against the account made in
accordance with the terms of all other contracts participating in the account.
Separate Account No. 4 (Pooled): Page
Report of Independent Accountants - PricewaterhouseCoopers LLP 7
Statement of Assets and Liabilities,
December 31, 1998 8
Statement of Operations and Changes in Net Assets
for the Years Ended December 31, 1998 and 1997 9
Portfolio of Investments
December 31, 1998 10
Notes to Financial Statements 15
6
<PAGE>
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
The Equitable Life Assurance Society of the United States
and the Contractowners of Separate Account No. 4
of The Equitable Life Assurance Society of the United States
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and
changes in net assets present fairly, in all material respects, the financial
position of Separate Account No. 4 (Pooled) (The Growth Equity Fund) of The
Equitable Life Assurance Society of the United States ("Equitable Life") at
December 31, 1998, its results of operations and changes in net assets for each
of the two years in the period then ended in conformity with generally accepted
accounting principles. These financial statements are the responsibility of
Equitable Life's management; our responsibility is to express an opinion on
these financial statements based on our audits. We conducted our audits of these
financial statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at December 31, 1998 by correspondence with the
custodian and brokers, provide a reasonable basis for the opinion expressed
above.
PricewaterhouseCoopers LLP
New York, New York
February 8, 1999
7
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO.4 (POOLED)
(THE ALLIANCE GROWTH EQUITY FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statement of Assets and Liabilities
December 31, 1998
- -------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments (Notes 2 and 3):
Common stocks -- at market value (cost: $1,914,414,699) ................................. $2,098,464,735
Preferred stocks -- at market value (cost: $841,125) .................................... 934,875
Participation in Separate Account No.2A -- at amortized cost, which approximates market
value, equivalent to 8,358
units at $285.54 ....................................................................... 2,386,642
Receivables:
Securities sold ......................................................................... 22,404,246
Dividends ............................................................................... 1,027,478
- -------------------------------------------------------------------------------------------------------------
Total assets ........................................................................... 2,125,217,976
- -------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payables:
Securities purchased .................................................................... 3,784,147
Due to Equitable Life's General Account ................................................. 7,913,160
Custodian fee payable ................................................................... 27,461
Investment management fees payable ...................................................... 5,210
Accrued expenses ......................................................................... 440,812
Amount retained by Equitable Life in Separate Account No. 4 (Note 1) ..................... 1,271,958
- -------------------------------------------------------------------------------------------------------------
Total liabilities ...................................................................... 13,442,748
- -------------------------------------------------------------------------------------------------------------
NET ASSETS (NOTE 1):
Net assets attributable to participants' accumulations ................................... 2,072,991,897
Reserves and other liabilities attributable to annuity benefits .......................... 38,783,331
- -------------------------------------------------------------------------------------------------------------
NET ASSETS ............................................................................... $2,111,775,228
=============================================================================================================
</TABLE>
See Notes to Financial Statements.
8
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 4 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statements of Operations and Changes in Net Assets
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
1998 1997
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
FROM OPERATIONS:
INVESTMENT INCOME (NOTE 2):
Dividends (net of foreign taxes withheld -- 1998: $199,170 and 1997: $2,138) ............. $ 12,224,979 $ 13,385,197
Interest ................................................................................. 477,732 845,517
- --------------------------------------------------------------------------------------------------------------------------------
Total .................................................................................... 12,702,711 14,230,714
EXPENSES (NOTE 4) ........................................................................ (18,036,108) (19,783,932)
- --------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT LOSS ...................................................................... (5,333,397) (5,553,218)
- --------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 2):
Realized gain from security and foreign currency transactions ............................ 424,897,105 372,430,956
- --------------------------------------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investments and foreign currency transactions:
Beginning of year ....................................................................... 690,125,231 448,580,808
End of year ............................................................................. 184,143,786 690,125,231
- --------------------------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation/depreciation ........................................... (505,981,445) 241,544,423
- --------------------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS ................................... (81,084,340) 613,975,379
- --------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets attributable to operations ............................. (86,417,737) 608,422,161
- --------------------------------------------------------------------------------------------------------------------------------
FROM CONTRIBUTIONS AND WITHDRAWALS:
Contributions ............................................................................ 451,738,195 546,890,479
Withdrawals .............................................................................. (897,373,357) (969,496,108)
- --------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets attributable to contributions and withdrawals ..................... (445,635,162) (422,605,629)
- --------------------------------------------------------------------------------------------------------------------------------
(Increase) in accumulated amount retained by Equitable Life in Separate Account No. 4
(Note 1) ................................................................................ (153,300) (360,863)
- --------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS ........................................................ (532,206,199) 185,455,669
NET ASSETS -- BEGINNING OF YEAR .......................................................... 2,643,981,427 2,458,525,758
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSETS -- END OF YEAR ................................................................ $2,111,775,228 $2,643,981,427
==============================================================================================================================
</TABLE>
See Notes to Financial Statements.
9
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 4 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
NUMBER OF MARKET
SHARES VALUE
- -------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS:
BASIC MATERIALS
CHEMICALS -- SPECIALTY (0.1%)
Crompton & Knowles Corp. ............................ 97,800 $ 2,023,238
------------
TOTAL BASIC MATERIALS (0.1%) ........................ 2,023,238
------------
BUSINESS SERVICES
ENVIRONMENTAL CONTROL (3.2%)
United States Filter Corp. * ........................ 3,000,000 68,625,000
------------
PRINTING, PUBLISHING & BROADCASTING (1.6%)
CBS Corp. ........................................... 1,000,000 32,750,000
------------
PROFESSIONAL SERVICES (0.1%)
Nielsen Media Research, Inc. ........................ 163,100 2,935,800
------------
TRUCKING, SHIPPING (0.2%)
Knightsbridge Tankers Ltd. .......................... 150,000 3,121,875
Marine Transport Corp. * ............................ 50,000 112,500
OMI Corp. * ......................................... 500,000 1,625,000
------------
4,859,375
------------
TOTAL BUSINESS SERVICES (5.1%) ...................... 109,170,175
------------
CAPITAL GOODS
AEROSPACE (0.2%)
Loral Space & Communications Ltd. * ................. 250,000 4,453,125
------------
TOTAL CAPITAL GOODS (0.2%) .......................... 4,453,125
------------
CONSUMER CYCLICALS
AIRLINES (8.6%)
Alaska Air Group, Inc. * ............................ 200,000 8,850,000
America West Holdings Corp. (Class B) * ............. 350,000 5,950,000
Continental Airlines, Inc. (Class B) * .............. 3,399,997 113,899,900
Northwest Airlines Corp. (Class A) * ................ 2,100,000 53,681,250
------------
182,381,150
------------
APPAREL, TEXTILE (2.2%)
Nautica Enterprises, Inc. * ......................... 114,200 1,713,000
Tommy Hilfiger Corp. * .............................. 650,000 39,000,000
Unifi, Inc. ......................................... 200,000 3,912,500
Wolverine World Wide, Inc. .......................... 154,600 2,048,450
------------
46,673,950
------------
AUTO RELATED (7.7%)
Budget Group, Inc. * ................................ 250,000 3,968,750
Circuit City Stores, Inc. -- CarMax Group * ......... 490,200 2,665,462
Dana Corp. .......................................... 300,000 12,262,500
</TABLE>
10
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 4 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- (Continued)
December 31, 1998
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
NUMBER OF MARKET
SHARES VALUE
- -------------------------------------------------------------------------------------
<S> <C> <C>
Dollar Thrifty Automotive Group, Inc. * ......... 841,700 $ 10,836,887
Republic Industries, Inc. * ..................... 9,000,000 132,750,000
------------
162,483,599
------------
FOOD SERVICES, LODGING (0.9%)
Extended Stay America, Inc. * ................... 1,660,000 17,430,000
Suburban Lodges of America, Inc. * .............. 35,000 286,563
------------
17,716,563
------------
HOUSEHOLD FURNITURE, APPLIANCES (1.6%)
Industrie Natuzzi Spa (ADR) ..................... 1,011,000 25,148,625
Newell Co. ...................................... 200,000 8,250,000
------------
33,398,625
------------
LEISURE RELATED (9.0%)
Carnival Corp. .................................. 2,000,000 96,000,000
Cendant Corporation * ........................... 506,000 9,645,625
Mirage Resorts, Inc. * .......................... 707,600 10,569,771
Royal Caribbean Cruises Ltd. .................... 2,000,000 74,000,000
------------
190,215,396
------------
RETAIL -- GENERAL (1.0%)
Circuit City Stores-Circuit City Group .......... 76,500 3,820,219
Dickson Concepts International, Inc. ............ 357,000 276,473
Genesis Direct, Inc. * .......................... 215,000 1,679,688
Limited, Inc. ................................... 100,000 2,912,500
Tandy Corp. ..................................... 50,000 2,059,375
Tiffany & Co. ................................... 200,000 10,375,000
------------
21,123,255
------------
TOTAL CONSUMER CYCLICALS (31.0%) ................ 653,992,538
------------
CONSUMER NONCYCLICALS
DRUGS (2.5%)
Geltex Pharmaceuticals, Inc. * .................. 700,000 15,837,500
MedImmune, Inc. * ............................... 361,600 35,956,600
------------
51,794,100
------------
FOODS (0.3%)
Tysons Foods, Inc. .............................. 350,000 7,437,500
------------
HOSPITAL SUPPLIES & SERVICES (1.3%)
HEALTHSOUTH Corp. * ............................. 1,800,000 27,787,500
------------
TOTAL CONSUMER NONCYCLICALS (4.1%) .............. 87,019,100
------------
</TABLE>
11
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 4 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- (Continued)
December 31, 1998
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
NUMBER OF MARKET
SHARES VALUE
- -------------------------------------------------------------------------------------
<S> <C> <C>
CREDIT-SENSITIVE
BANKS (0.8%)
Citigroup, Inc. ......................................... 300,000 $ 14,850,000
Washington Mutual, Inc. ................................. 84,000 3,207,750
------------
18,057,750
------------
FINANCIAL SERVICES (13.8%)
Edwards (A.G.), Inc. .................................... 760,000 28,310,000
Legg Mason, Inc. ........................................ 2,500,000 78,906,250
MBNA Corp. .............................................. 6,900,000 172,068,750
Newcourt Credit Group, Inc. ............................. 100,000 3,493,750
PMI Group, Inc. ......................................... 200,000 9,875,000
------------
292,653,750
------------
INSURANCE (8.9%)
Ace Ltd. ................................................ 100,000 3,443,750
CNA Financial Corp. * ................................... 3,530,100 142,086,525
IPC Holdings Ltd. ....................................... 207,400 4,809,088
NAC Re Corp. ............................................ 600,000 28,162,500
Travelers Property Casualty (Class A) ................... 300,000 9,300,000
------------
187,801,863
------------
REAL ESTATE (0.1%)
Excel Legacy Corp. * .................................... 140,000 560,000
Prime Retail, Inc. ...................................... 60,000 588,750
------------
1,148,750
------------
UTILITY -- ELECTRIC (0.1%)
AES Corp. * ............................................. 30,000 1,421,250
------------
UTILITY -- TELEPHONE (7.0%)
Embratel Participacoes (ADR) * .......................... 220,000 3,066,250
Tele Celular Sul Participacoes (ADR) * .................. 22,000 383,625
Tele Centro Oeste Celular Participacoes (ADR) * ......... 73,333 215,416
Tele Centro Sul Participacoes (ADR) * ................... 44,000 1,839,750
Tele Leste Celular Participacoes (ADR) * ................ 4,400 124,850
Telemig Celular Participacoes (ADR) * ................... 11,000 233,750
Tele Nordeste Celular Participacoes (ADR) * ............. 11,000 203,500
Tele Norte Celular Participacoes (ADR) * ................ 4,400 99,275
Tele Norte Leste Participacoes (ADR) * .................. 220,000 2,736,250
Telephone & Data Systems, Inc. .......................... 2,930,000 131,666,875
Telesp Celular Participacoes (ADR) * .................... 88,000 1,540,000
Telesp Participacoes S.A. (ADR) * ....................... 220,000 4,867,500
Tele Sudeste Celular Participacoes (ADR) * .............. 44,000 910,250
------------
147,887,291
------------
TOTAL CREDIT-SENSITIVE (30.7%) .......................... $648,970,654
------------
</TABLE>
12
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 4 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- (Continued)
December 31, 1998
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
NUMBER OF MARKET
SHARES VALUE
- -----------------------------------------------------------------------------------------
<S> <C> <C>
ENERGY
OIL -- DOMESTIC (0.4%)
Kerr McGee Corp. .......................................... 220,000 $ 8,415,000
------------
OIL -- INTERNATIONAL (0.1%)
IRI International Corporation * ........................... 305,000 1,220,000
------------
OIL -- SUPPLIES & CONSTRUCTION (4.9%)
BJ Services Co. * ......................................... 440,000 6,875,000
Halliburton Co. ........................................... 1,000,000 29,625,000
Lukoil Holdings -- Spons (ADR) ............................ 15,000 232,520
Lukoil Holdings -- Spons (ADR) (Preferred Shares) ......... 40,000 134,684
Noble Drilling Corp. * .................................... 2,200,000 28,462,500
Oceaneering International, Inc. * ......................... 300,000 4,500,000
Parker Drilling Corp. * ................................... 3,756,100 11,972,569
Rowan Cos., Inc. * ........................................ 1,684,800 16,848,000
Stolt Comex Seaway S.A. * ................................. 14,000 94,500
Stolt Comex Seaway S.A. (ADR) (Class A) * ................. 880,000 4,950,000
------------
103,694,773
------------
TOTAL ENERGY (5.4%) ....................................... 113,329,773
------------
TECHNOLOGY
ELECTRONICS (8.8%)
Altera Corp. * ............................................ 460,000 28,002,500
Cisco Systems, Inc. * ..................................... 400,000 37,125,000
DBT Online, Inc. * ........................................ 160,000 3,990,000
Micron Technology, Inc. * ................................. 300,000 15,168,750
Motorola, Inc. ............................................ 50,000 3,053,125
Network Associates, Inc. * ................................ 550,000 36,437,500
Sanmina Corp. * ........................................... 305,600 19,100,000
Sterling Commerce, Inc. * ................................. 250,000 11,250,000
Xilinx, Inc. * ............................................ 479,300 31,214,413
------------
185,341,288
------------
OFFICE EQUIPMENT SERVICES (3.4%)
First Data Corp. .......................................... 600,000 19,012,500
HBO & Co. ................................................. 1,752,500 50,274,844
Novell, Inc. * ............................................ 100,000 1,812,500
------------
71,099,844
------------
TELECOMMUNICATIONS (10.6%)
American Satellite Network -- Rights * .................... 70,000 0
Esprit Telecom Group PLC (ADR) * .......................... 50,000 2,337,500
Global TeleSystems Group, Inc. * .......................... 1,290,000 71,917,500
</TABLE>
13
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 4 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- (Concluded)
December 31, 1998
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
NUMBER OF MARKET
SHARES VALUE
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Millicom International Cellular S.A. * .................................. 1,550,000 $ 54,056,250
NTL Incorporated * ...................................................... 100,000 5,643,750
United States Cellular Corp. * .......................................... 2,345,000 89,110,000
--------------
223,065,000
--------------
TOTAL TECHNOLOGY (22.8%) ................................................ 479,506,132
--------------
TOTAL COMMON STOCKS (99.4%)
(Cost $1,914,414,699)................................................... 2,098,464,735
--------------
PREFERRED STOCKS:
CONSUMER CYCLICALS
AIRLINES (0.0%)
Continental Airlines Financial Trust
8.5% Conv. ............................................................. 13,500 934,875
--------------
TOTAL CONSUMER CYCLICALS (0.0%) ......................................... 934,875
--------------
TOTAL PREFERRED STOCKS (0.0%)
(Cost $841,125)......................................................... 934,875
--------------
PARTICIPATION IN SEPARATE ACCOUNT NO. 2A,
at amortized cost, which approximates
market value, equivalent to 8,358 units
at $285.54 each (0.1%).................................................. 2,386,642
--------------
TOTAL INVESTMENTS (99.5%)
(Cost $1,917,642,466)................................................... 2,101,786,252
OTHER ASSETS LESS LIABILITIES (0.5%) .................................... 11,260,934
AMOUNTS RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT NO. 4 (0.0%) (NOTE 1) ................................. (1,271,958)
--------------
NET ASSETS (100.0%) ..................................................... $2,111,775,228
==============
Reserves attributable to participants' accumulations .................... 2,072,991,897
Reserves and other contract liabilities attributable to annuity benefits 38,783,331
--------------
NET ASSETS .............................................................. $2,111,775,228
==============
</TABLE>
- ----------
* Non-income producing.
See Notes to Financial Statements.
14
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 4 (POOLED)
of The Equitable Life Assurance Society of the United States
Notes to Financial Statements
1. Separate Account No. 4 (Pooled) (the Alliance Growth Equity Fund) (the Fund)
of The Equitable Life Assurance Society of the United States (Equitable
Life), a wholly-owned subsidiary of The Equitable Life Companies
Incorporated, was established in conformity with the New York State
Insurance Law. Pursuant to such law, to the extent provided in the
applicable contracts, the net assets in the Fund are not chargeable with
liabilities arising out of any other business of Equitable Life. The
excess of assets over reserves and other contract liabilities amounting to
$1,271,958 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 Separate Account No. 4. The Members Retirement Programs
constitute, among many others, contract owners participating in this Fund.
Interests of retirement and investment plans for Equitable Life employees,
managers, and agents in Separate Account No. 4 aggregated $323,953,589
(15.3%), at December 31, 1998 and $384,471,790 (14.5%), at December 31,
1997, of the net assets in the Fund.
Equitable Life is the investment manager for the Fund. Alliance Capital
Management L.P. (Alliance) serves as the investment adviser to Equitable
Life with respect to the management of the Fund. Alliance is a
publicly-traded limited partnership which is indirectly majority-owned by
Equitable Life.
Equitable Life and Alliance seek to obtain the best price and execution of
all orders placed for the Fund considering all circumstances. In addition
to using brokers and dealers to execute portfolio security transactions for
accounts under their management, Equitable Life and Alliance may also enter
into other types of business and securities transactions with brokers and
dealers, which will be unrelated to allocation of the Fund's portfolio
transactions.
The accompanying financial statements are prepared in conformity with
generally accepted accounting principles (GAAP). The preparation of
financial statements in conformity with GAAP requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
2. Security transactions are recorded on the trade date. Amortized cost of debt
securities consists of cost adjusted, where applicable, for amortization
of premium or accretion of discount. Dividend income is recorded on the
ex-dividend date; interest income (including amortization of premium and
discount on securities using the effective yield method) is accrued daily.
Realized gains and losses on the sale of investments are computed on the
basis of the identified cost of the related investments sold.
Transactions denominated in foreign currencies are recorded at the rate
prevailing at the date of such transactions. Asset and liability accounts
that are denominated in a foreign currency are adjusted to reflect the
current exchange rate at the end of the period. Transaction gains or losses
resulting from changes in the exchange rate during the reporting period or
upon settlement of the foreign currency transactions are reflected under
"Realized and Unrealized Gain (Loss) on Investments" in the Statements of
Operations and Changes in Net Assets.
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
15
<PAGE>
- --------------------------------------------------------------------------------
(Participating Funds) under Equitable Life's management. Separate Account
No. 2A invests in debt securities maturing in sixty days or less from the
date of acquisition. At December 31, 1998, the amortized cost of
investments held in Separate Account No. 2A consist of the following:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
AMORTIZED COST %
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Commercial Paper, 5.10% - 5.35% due 01/04/99 through 02/18/99 $ 230,335,099 97.7%
U.S. Government Agency, 4.28% due 01/04/99 ................... 5,198,145 2.2
- ---------------------------------------------------------------------------------------------
Total Investments ............................................ 235,533,244 99.9
Other Assets less Liabilities ................................ 215,649 0.1
- ---------------------------------------------------------------------------------------------
Net Assets of Separate Account No. 2A ........................ $ 235,748,893 100.0%
=============================================================================================
Units Outstanding ............................................ 825,639
Unit Value ................................................... $ 285.54
- ---------------------------------------------------------------------------------------------
</TABLE>
Participating Funds purchase or redeem units depending on each participating
account's excess cash availability or cash needs to meet its liabilities.
Separate Account No. 2A is not subject to investment management fees. Separate
Account No. 2A is valued daily at amortized cost, which approximates market
value.
For 1998 and 1997, investment security transactions, excluding short-term debt
securities, were as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
COST OF NET PROCEEDS
PURCHASES OF SALES
- --------------------------------------------------------------------------------------
Stocks and long-term corporate debt securities:
<S> <C> <C>
1998 ........................................ $1,692,067,102 $2,151,023,546
1997 ........................................ 1,569,991,103 1,988,739,298
U.S. Government obligations:
1998 ........................................ -- --
1997 ........................................ -- --
- ------------------------------------------------- -------------- --------------
</TABLE>
3. Investment securities are valued as follows:
Stocks listed on national securities exchanges and certain over-the-counter
issues traded on the National Association of Securities Dealers, Inc.
Automated Quotation (NASDAQ) national market system are valued at the last
sale price, or, if no sale, at the latest available bid price.
Foreign securities not traded directly, or in American Depository Receipt
(ADR) form in the United States, are valued at the last sale price in the
local currency on an exchange in the country of origin. Foreign currency is
converted into its U.S. dollar equivalent at current exchange rates.
United States Treasury securities and other obligations issued or
guaranteed by the United States Government, its agencies or
instrumentalities are valued at representative quoted prices.
Long-term publicly traded corporate bonds are valued at prices obtained
from a bond pricing service of a major dealer in bonds when such prices are
available; however, in circumstances where Equitable Life and Alliance deem
it appropriate to do so, an over-the-counter or exchange quotation may be
used.
Convertible preferred stocks listed on national securities exchanges are
valued at their last sale price or, if there is no sale, at the latest
available bid price.
Convertible bonds and unlisted convertible preferred stock are valued at
bid prices obtained from one or more
16
<PAGE>
- --------------------------------------------------------------------------------
major dealers in such securities; where there is a discrepancy between
dealers, values may be adjusted based on recent premium spreads to the
underlying common stock.
Other assets that do not have a readily available market price are valued
at fair value as determined in good faith by Equitable Life's Investment
officers.
Separate Account No. 2A is valued daily at amortized cost, which
approximates market value. Short-term debt securities purchased directly by
the Funds which mature in 60 days or less are valued at amortized cost.
Short-term debt securities which mature in more than 60 days are valued at
representative quoted prices.
4. Charges and fees are deducted in accordance with the terms of the various
contracts which participate in the Fund. With respect to the Members
Retirement Programs, these expenses consist of investment management and
accounting fees, program expense charge, direct expenses and record
maintenance and report fees. These charges and fees are paid to Equitable
Life by the Fund and are recorded as expenses in the accompanying Statements
of Operations and Changes in Net Assets.
5. No Federal income tax based on net income or realized and unrealized capital
gains was applicable to contracts participating in the Fund for the two
years ended December 31, 1998, by reason of applicable provisions of the
Internal Revenue Code and no Federal income tax payable by Equitable Life
for such years will affect such contracts. Accordingly, no Federal income
tax provision is required.
17
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements included in Part B.
The following are included in the Statement of Additional
Information relating to the American Dental Association
Program:
1. Separate Account Nos., 4 (Pooled), 191 and 200
(The Growth Equity, ADA Foreign and Aggressive
Equity Accounts):
-Report of Independent Accountants - PricewaterhouseCoopers LLP
2. Separate Account No. 4 (Pooled):
- Statement of Assets and Liabilities, December 31, 1998
- Statements of Operations and Changes in Net
Assets for the Years Ended December 31, 1998 and 1997
- Portfolio of Investments, December 31, 1998
- Notes to Financial Statements
3. Separate Account No. 191:
- Statement of Assets and Liabilities, December 31, 1998
- Statements of Operations and Changes in Net
Assets for the Years Ended December 31, 1998 and 1997
4. Separate Account No. 200:
- Statement of Assets and Liabilities
- Statement of Operations and Changes in Net Assets for
the Years Ended December 31, 1998 and 1997
5. Separate Account Nos. 191 and 200:
- Notes to Audited Financial Statements
6. Separate Account No. 30 (Pooled):
- Report of Independent Accountants - PricewaterhouseCoopers LLP
- Statement of Assets and Liabilities, December 31, 1998
- Statements of Operations and Changes in Net Assets for the Years
Ended December 31, 1997 and 1997
- Statements of Cash Flows for the Years Ended December 31, 1998 and
1996
- Statement of Investments and Net Assets, December 31, 1998
- Notes to Financial Statements
C-1
<PAGE>
7. Separate Account No. 8 (Prime Property Fund):
- Report of Independent Accountants - PricewaterhouseCoopers LLP
- Statement of Assets and Liabilities, December 31, 1998
- Statements of Operations and Changes in Net Assets for the Years
Ended December 31, 1998 and 1997
- Statements of Cash Flows for the Years Ended December 31, 1998 and
1997
- Notes to Financial Statements
8. Schedule X:
- Supplementary Income Statement Information, December 31, 1998 and
1997
9. Schedule XII:
- Mortgage Loans Receivable on Real Estate, December 31, 1998 and
1997
10. The Equitable Life Assurance Society of the United States:
- Report of Independent Accountants - PricewaterhouseCoopers LLP
- Consolidated Balance Sheets, December 31, 1998 and 1997
- Consolidated Statements of Earnings for the Years Ended December
31, 1998, 1997 and 1996
- Consolidated Statements of Equity for the Years Ended December 31,
1998, 1997 and 1996
- Consolidated Statements of Cash Flows for the Years Ended December
31, 1998, 1997 and 1996.
(b) Exhibits.
The following Exhibits are filed herewith:
1. (a) Resolutions of the Board of Directors of The Equitable Life Assurance
Society of the United States ("Equitable") authorizing the
establishment of Equitable's Separate Account Nos. 3, 4, 30, 190 and
191, incorporated by reference to Post-Effective Amendment No. 1 on
Form N-3 to Registration Statement 33-46995, filed July 22, 1992.
1. (b) Resolutions of the Board of Directors of The Equitable authorizing the
establishment of Equitable's Separate Account 200, dated September 5,
1995, incorporated by reference to Exhibit 1(b) to Registration
Statement No.333-50967, filed February 5, 1999.
2. Not Applicable.
3. Not Applicable.
C-2
<PAGE>
4. (a) Exhibit 6(a)(2) (Group Annuity Contract AC 2100,
as amended and restated effective February 1,
1991 on contract Form No. APC 1,000- 91, among
the Trustees of the American Dental Association
Members Retirement Trust, the American Dental
Association Members Pooled Trust for Retirement
Plans and The Equitable Life Assurance Society
of the United States), incorporated by reference
to Post-Effective Amendment No. 1 on Form N-3 to
Registration Statement 33-40162, filed December
20, 1991.
(b) Rider No. 1 to Group Annuity Contract AC 2100
among the Trustees of the American Dental
Association Members Retirement Trust, the
American Dental Association Members Pooled Trust
for Retirement Plans and The Equitable Life
Assurance Society of the United States,
incorporated by reference to Registration No.
33-46995 on Form N-3 of Registrant, filed April
8, 1992.
(c) Form of Rider No. 2 to Group Annuity Contract AC
2100 among the Trustees of the American Dental
Association Members Retirement Trust, the
American Dental Association Members Pooled Trust
for Retirement Plans and The Equitable Life
Assurance Society of the United States,
incorporated by reference to Registration No.
33-46995 on Form N-3 of Registrant, filed April
8, 1992.
(d) Rider No. 3 to Group Annuity Contract AC 2100
among the Trustees of the American Dental
Association Members Retirement Trust, the
American Dental Association Members Pooled Trust
for Retirement Plans and The Equitable Life
Assurance Society of the United States,
incorporated by reference to Registration No.
33-75616 on Form N-4 of Registrant, filed April
29, 1994.
(e) Form of Rider No. 4 to Group Annuity Contract AC
2100 among the Trustees of the American Dental
Association Members Retirement Trust, the
American Dental Association Members Pooled Trust
for Retirement
C-3
<PAGE>
Plans and The Equitable Life Assurance Society
of the United States, incorporated by reference
to Registration No. 33-75616 on Form N-4 of
Registrant, filed April 29, 1994.
(f) Form of Rider No. 5 to Group Annuity Contract AC
2100 among the Trustees of the American Dental
Association Members Retirement Trust, the
American Dental Association Members Pooled Trust
for Retirement Plans and The Equitable Life
Assurance Society of the United States,
incorporated by reference to Registration No.
33-75616 on Form N-4 of Registrant, on February
27, 1995.
(g) Form of Rider No. 6 to Group Annuity Contract AC
2100 among the Trustees of the American Dental
Association Members Retirement Trust, the
American Dental Association Members Pooled Trust
for Retirement Plans and The Equitable Life
Assurance Society of the United States,
previously filed with this Registration
Statement No. 33-63113 on September 29, 1995.
(h) Form of Rider No. 7 to Group Annuity Contract AC
2100 among the Trustees of the American Dental
Association Members Retirement Trust, the
American Dental Association Members Pooled Trust
for Retirement Plans and The Equitable Life
Assurance Society of the United States,
incorporated by reference to Pre-Effective
Amendment No. 1 to Registration Statement No.
33-63113 on Form N-4 of Registrant, filed on
November 21, 1995.
(i) Form of Rider No. 8 to Group Annuity Contract AC
2100 among the Trustees of the American Dental
Association Members Retirement Trust, the
American Dental Association Members Pooled Trust
for Retirement Plans and The Equitable Life
Assurance Society of the United States,
incorporated by reference to Pre-Effective
Amendment No. 1 to Registration Statement No.
333-01301 on Form N-4 of Registrant filed April
30, 1996.
(j) Form of Rider No. 9 to Group Annuity Contract
AC 2100 among the Trustees of the American
Dental Association Members Retirement Trust,
the American Dental Association Members Pooled
Trust for Retirement Plans and The Equitable
Life Assurance Society of the United States,
incorporated by reference to Registration
Statement No. 333-25807 on form N-4, filed on
April 24, 1997.
5. (a) Exhibit 7(a) (Form of Participation Agreement
for the standardized Profit-Sharing Plan under
the ADA Program), incorporated by reference to
Post-Effective Amendment No. 1 on Form N-3 to
Registration Statement on Form S-1 of
Registrant, filed April l6, 1986.
(b) Exhibit 7(b) (Form of Participation Agreement
for the nonstandardized Profit-Sharing Plan
under the ADA Program), incorporated by
reference to Post-Effective Amendment No. 1 on
Form N-3 to Registration Statement on Form S-1
of Registrant, filed April l6, 1986.
(c) Exhibit 7(e) (Copy of Attachment to Profit
Sharing Participation Agreement under the
American Dental Association Members Retirement
Plan), incorporated by reference to Registration
No. 33-21417 on Form N-3 of Registrant, filed
April 26, 1988.
(d) Exhibit 7(e)(2) (Form of Participant Enrollment
Form under the ADA Program), incorporated by
reference to Post-Effective Amendment No. 2 on
Form N-3 to Registration Statement on Form S-1
of Registrant, filed April 2l, l987.
(e) Exhibit 7(v) (Form of Simplified Participation
Agreement for the Profit-Sharing Plan under the
ADA Program, as filed with the Internal
C-4
<PAGE>
Revenue Service), incorporated by reference to
Post-Effective Amendment No. 2 to Registration
No. 33-21417 on Form N-3 of Registrant, filed
April 26, 1989.
(f) Exhibit 7(w) (Form of Non-Standardized
Participation Agreement for the Profit-Sharing
Plan under the ADA Program, as filed with the
Internal Revenue Service), incorporated by
reference to Post- Effective Amendment No. 2 to
Registration No. 33-21417 on Form N-3 of
Registrant, filed April 26, 1989.
(g) Exhibit 7(x) (Form of Standardized Participation
Agreement for the Profit-Sharing Plan under the
ADA Program, as filed with the Internal Revenue
Service), incorporated by reference to
Post-Effective Amendment No. 2 to Registration
No. 33-21417 on Form N-3 of Registrant, filed
April 26, 1989.
6. (a) Copy of the Restated Charter of The Equitable
Life Assurance Society of the United States, as
amended January 1, 1997, incorporated by
reference to Registration No. 333-25807 on Form
N-4, filed April 24, 1997.
(b) By-Laws of The Equitable Life Assurance Society
of the United States, as amended November 21,
1996, incorporated by reference to Registration
No. 333-25807 on Form N-4, filed April 24, 1997.
7. Not applicable
8. (a) Exhibit 11(a)(2) (Form of American Dental
Association Members Retirement Plan, as filed
with the Internal Revenue Service), incorporated
by reference to Post-Effective Amendment No. 2
to Registration No. 33-21417 on Form N-3 of
Registrant, filed April 26, 1989.
(b) Exhibit 11(g)(2) (Form of American Dental
Association Members Retirement Trust, as filed
with the Internal Revenue Service), incorporated
by reference to Post-Effective Amendment No. 2
to Registration No. 33-21417 on Form N-3 of
Registrant, filed April 26, 1989.
(c) Exhibit 11(i) (Form of First Amendment to the
American Dental Association Members Retirement
Trust), incorporated by reference to
Post-Effective Amendment No. 1 to Registration
No. 33-40162 on Form N-3 of Registrant, filed
December 20, 1991.
C-5
<PAGE>
(d) Exhibit 11(o) (Copy of Administration Services
Agreement, dated May 1, 1994, among The
Equitable Life Assurance Society of the United
States, the Trustees of the American Dental
Association Members Retirement Trust, and of the
American Dental Association Members Pooled Trust
for Retirement Plans and the Council of
Insurance of the American Dental Association),
incorporated by reference to Registration
Statement No. 33-75614 on Form N-3 of
Registrant, filed February 23, 1994.
(e) Exhibit 11(j) (Copy of American Dental
Association Members Pooled Trust for Retirement
Plans, dated as of January 1, 1984),
incorporated by reference to Post-Effective
Amendment No. 1 to Registration No. 33-40162 on
Form N-3 of Registrant on Form N-3 of
Registrant, filed December 20, 1991.
(f) Exhibit 11(k) (Form of First Amendment to the
American Dental Association Members Pooled Trust
for Retirement Plans, dated as of January 1,
1984), incorporated by reference to
Post-Effective Amendment No. 1 to Registration
No. 33-40162 on Form N-3 of Registrant, filed
December 20, 1991.
9. (a) Opinion and Consent of Anthony A. Dreyspool,
Vice President and Associate General Counsel of
The Equitable Life Assurance Society of the
United States incorporated by reference to
Registration Statement No. 333-25807, filed
April 24, 1997.
(b) Opinion and Consent of Mary P. Breen, Vice
President and Associate General Counsel of the
Equitable Life Assurance Society of the United
States, previously filed with this Registration
Statement on Form N-4, File No. 333-50967 on
April 24, 1998.
(c) Opinion and Consent of Mary Joan Hoene, Vice
President and Counsel of The Equitable Life
Assurance Society of the United States.
10. (a) Consent of Anthony A. Dreyspool (included within
Exhibit 9(a) above).
(b) Consent of Mary P. Breen, (included within
Exhibit 9 (b) above).
(b)(i)Consent of Mary Joan Hoene (included within
Exhibit 9(c) above).
(c) Consent of PricewaterhouseCoopers LLP.
(d) Powers of Attorney.
11. Not applicable.
12. Not applicable.
13. Not applicable.
14. Not Applicable.
C-6
<PAGE>
Item 25: Directors and Officers of Equitable.
Set forth below is information regarding the directors and principal
officers of Equitable. Equitable's address is 1290 Avenue of Americas,
New York, New York 10104. The business address of the persons whose
names are preceded by an asterisk is that of Equitable.
POSITIONS AND
NAME AND PRINCIPAL OFFICES WITH
BUSINESS ADDRESS EQUITABLE
- ---------------- ---------
DIRECTORS
Francoise Colloc'h Director
AXA
23, Avenue Matignon
75008 Paris, France
Henri de Castries Director
AXA
23, Avenue Matignon
75008 Paris, France
Joseph L. Dionne Director
The McGraw-Hill Companies
1221 Avenue of the Americas
New York, NY 10020
Denis Duverne Director
AXA
23, Avenue Matignon
75008 Paris, France
Jean-Rene Fourtou Director
Rhone-Poulenc S.A.
25 Quai Paul Doumer
92408 Courbevoie Cedex,
France
Norman C. Francis Director
Xavier University of Louisiana
7325 Palmetto Street
New Orleans, LA 70125
C-7
<PAGE>
POSITIONS AND
NAME AND PRINCIPAL OFFICES WITH
BUSINESS ADDRESS EQUITABLE
- ---------------- ---------
Donald J. Greene Director
LeBouef, Lamb, Greene & MacRae
125 West 55th Street
New York, NY 10019-4513
John T. Hartley Director
Harris Corporation
1025 NASA Boulevard
Melbourne, FL 32919
John H.F. Haskell Jr. Director
Warburg Dillion Read LLC
535 Madison Avenue
New York, NY 10028
Mary R. (Nina) Henderson Director
International Plaza
P.O. Box 8000
Englewood Cliffs, NJ 07632-9976
W. Edwin Jarmain Director
Jarmain Group Inc.
121 King Street West
Suite 2525
Toronto, Ontario M5H 3T9,
Canada
George T. Lowy Director
Cravath, Swaine & Moore
825 Eighth Avenue
New York, NY 10019
C-8
<PAGE>
POSITIONS AND
NAME AND PRINCIPAL OFFICES WITH
BUSINESS ADDRESS EQUITABLE
- ---------------- ---------
Didier Pineau-Valencienne Director
Schneider S.A.
64-70 Avenue Jean-Baptiste Clement
92646 Boulogne-Billancourt Cedex
France
George J. Sella, Jr. Director
P.O. Box 397
Newton, NJ 07860
Peter J. Tobin Director
St. John's University
8,000 Utopia Parkway
Jamaica, NY 11439
Dave H. Williams Director
Alliance Capital Management Corporation
1345 Avenue of the Americas
New York, NY 10105
OFFICER-DIRECTORS
- -----------------
*Michael Hegarty President, Chief Operating
Officer and Director
*Edward D. Miller Chairman of the Board,
Chief Executive Officer
and Director
* Stanley B. Tulin Vice Chairman of the Board,
Chief Financial Officer and Director
OTHER OFFICERS
- --------------
*Leon Billis Executive Vice President
and Chief Information Officer
*Harvey Blitz Senior Vice President
*Kevin R. Byrne Senior Vice President and Treasurer
*Alvin H. Fenichel Senior Vice President and
Controller
C-9
<PAGE>
POSITIONS AND
NAME AND PRINCIPAL OFFICES WITH
BUSINESS ADDRESS EQUITABLE
- ---------------- ---------
*Paul J. Flora Senior Vice President and Auditor
*Robert E. Garber Executive Vice President and
General Counsel
*Jerome S. Golden Executive Vice President
James D. Goodwin Vice President
*Edward J. Hayes Senior Vice President
*Mark A. Hug Senior Vice President
*Donald R. Kaplan Vice President and Chief Compliance
Officer and Associate General
Counsel
*Michael S. Martin Executive Vice President and Chief
Marketing Officer
*Douglas Menkes Senior Vice President and
Corporate Actuary
*Peter D. Noris Executive Vice President and Chief
Investment Officer
*Anthony C. Pasquale Senior Vice President
*Pauline Sherman Senior Vice President, Secretary and
Associate General Counsel
*Samuel B. Shlesinger Senior Vice President
*Richard V. Silver Senior Vice President and Deputy
General Counsel
*Jose Suquet Senior Executive Vice President and
Chief Distribution Officer
*Naomi Weinstein Vice President
*Maureen K. Wolfson Vice President
C-10
<PAGE>
Item 26. Persons Controlled by or Under Common Control with the Insurance
Company or Registrant.
Separate Account Nos. 3, 4, 8, 30, 191 and 200 of The Equitable Life
Assurance Society of the United States (the "Separate Accounts") are separate
accounts of Equitable. Equitable, a New York stock life insurance company, is a
wholly owned subsidiary of The Equitable Companies Incorporated (the "Holding
Company"), a publicly traded company.
The largest stockholder of the Holding Company is AXA which as of March
31, 1999 beneficially owned 58.3% of the Holding Company's outstanding common
stock. AXA is able to exercise significant influence over the operations and
capital structure of the Holding Company and its subsidiaries, including
Equitable. AXA, a French company, is the holding company for an international
group of insurance and related financial services companies.
C-11
<PAGE>
ORGANIZATION CHART OF EQUITABLE'S AFFILIATES
The Equitable Companies Incorporated (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)
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)
(39.3% limited partnership interest)
EVCO, Inc. (1991) (New Jersey)
EVSA, Inc. (1992) (Pennsylvania)
Prime Property Funding, Inc. (1993) (Delaware)
Wil Gro, Inc. (1992) (Pennsylvania)
Equitable Underwriting and Sales Agency (Bahamas) Limited (1993)
(Bahamas)
(a) Registered Broker/Dealer (b) Registered Investment Advisor
C-12
<PAGE>
The Equitable Companies Incorporated (cont.)
Donaldson Lufkin & Jenrette, Inc.
The Equitable Life Assurance Society of the United States (cont.)
Fox Run, Inc. (1994) (Massachusetts)
STCS, Inc. (1992) (Delaware)
CCMI Corporation (1994) (Maryland)
FTM Corporation (1994) (Maryland)
Equitable BJVS, Inc. (1992) (California)
Equitable Rowes Wharf, Inc. (1995) (Massachusetts)
Camelback JVS, Inc. (1995) (Arizona)
ELAS Realty, Inc. (1996) (Delaware)
100 Federal Street Realty Corporation (Massachusetts)
Equitable Structured Settlement Corporation (1996) (Delaware)
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. (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-13
<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 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) (14.8% limited partnership interest)
EQ Services, Inc. (1992) (Delaware)
EREIM Managers Corp. (1986) (Delaware)
ML/EQ Real Estate Portfolio, L.P.
EML Associates, L.P.
(a) Registered Broker/Dealer (b) Registered Investment
Advisor
C-14
<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 of Puerto Rico, Inc. (1997) (Puerto Rico)
EquiSource Insurance Agency of Utah, Inc. (1986) (Utah)
EquiSource of Washington, Inc. (1987) (Washington)
EquiSource of Wyoming, Inc. (1986) (Wyoming)
C-15
<PAGE>
ORGANIZATION CHART OF EQUITABLE'S AFFILIATES
ADDENDUM B - INVESTMENT SUBSIDIARIES
HAVING MORE THAN FIVE SUBSIDIARIES
------------------------------------
Donaldson, Lufkin & Jenrette, Inc. has the following subsidiaries, and
approximately 150 other subsidiaries, most of which are special purpose
subsidiaries (the number fluctuates according to business needs):
Donaldson, Lufkin & Jenrette, Securities Corporation (1985)
(Delaware) (a) (b)
Wood, Struthers & Winthrop Management Corp. (1985)
(Delaware) (b)
Autranet, Inc. (1985) (Delaware) (a)
DLJ Real Estate, Inc.
DLJ Capital Corporation (b)
DLJ Mortgage Capital, Inc. (1988) (Delaware)
Column Financial, Inc. (1993) (Delaware) (50%)
Alliance Capital Management Corporation (as general partner) (b) has the
following subsidiaries:
Alliance Capital Management L.P. (1988) (Delaware) (b)
Alliance Capital Management Corporation of Delaware, Inc.
(Delaware)
Alliance Fund Services, Inc. (Delaware) (a)
Alliance Fund Distributors, Inc. (Delaware) (a)
Alliance Capital Oceanic Corp. (Delaware)
Alliance Capital Management Australia Pty. Ltd.
(Australia)
Meiji - Alliance Capital Corp. (Delaware) (50%)
Alliance Capital (Luxembourg) S.A. (99.98%)
Alliance Eastern Europe Inc. (Delaware)
Alliance Barra Research Institute, Inc. (Delaware)
(50%)
Alliance Capital Management Canada, Inc. (Canada)
(99.99%)
Alliance Capital Management (Brazil) Llda
Alliance Capital Global Derivatives Corp. (Delaware)
Alliance International Fund Services S.A.
(Luxembourg)
Alliance Capital Management (India) Ltd. (Delaware)
Alliance Capital Mauritius Ltd.
Alliance Corporate Finance Group, Incorporated
(Delaware)
Equitable Capital Diversified Holdings, L.P. I
Equitable Capital Diversified Holdings, L.P. II
Curisitor Alliance L.L.C. (Delaware)
Curisitor Holdings Limited (UK)
Alliance Capital Management (Japan), Inc.
Alliance Capital Management (Asia) Ltd.
Alliance Capital Management (Turkey), Ltd.
Cursitor Alliance Management Limited (UK)
(a) Registered Broker/Dealer (b) Registered Investment Advisor
C-16
<PAGE>
AXA GROUP CHART
The information listed below is dated as of January 1, 1999; percentages
shown represent voting power. The name of the owner is noted when AXA
indirectly controls the company.
AXA INSURANCE AND REINSURANCE BUSINESS HOLDING
COMPANY COUNTRY VOTING POWER
- ------- ------- ------------
AXA Assurances IARD France 100% by AXA France Assurance
AXA Assurances Vie France 88.1% by AXA France Assurance
and 11.9% by AXA Collectives
AXA Courtage IARD France 100% by AXA France Assurance
and AXA Global Risks
AXA Conseil Vie France 100% by AXA France Assurance
AXA Conseil IARD France 100% by AXA France Assurance
AXA Direct France 100% by AXA
Direct Assurances IARD France 100% by AXA Direct
Direct Assurance Vie France 100% by AXA Direct
Tellit Vie Germany 100% by AKA-CKAG
Axiva France 100% by AXA France Assurance
and AXA Conseil Vie
Juridica France 100% by AXA France Assurance
AXA Assistance France France 100% by AXA Assistance SA
AXA Collectives France AXA France Assurance, AXA
Assurances IARD and AXA
Courtage IARD Mutuelle
Societe Beaujon France 100% by AXA
Lor Finance France 99.3% by AXA
Jour Finance France 100% by AXA Conseil IARD and
by AXA Assurances IARD
Financiere 45 France 99.8% by AXA
Mofipar France 99.9% by AXA
NSM Vie France 40.1% by AXA France Assurance
Saint Georges Re France 100% by France Assurance
AXA Global Risks France 100% owned by AXA France
Assurance, AXA Courtage
Assurance Mutuelle and AXA
Assurances IARD Mutuelle
Argovie France 94% by Axiva
AXA Assistance SA France 76.8% by AXA and 23.2% by AXA
France Assurance
S.P.S Reassurance France 69.9% by AXA Reassurance
AXA Participations France 50% by AXA, 25% by AXA Global
Risks and 25% by AXA Courtage
IARD
Colisee Excellence France 100% by Financiere Mermoz
Financiere Mermoz France 100% by AXA
C-17
<PAGE>
COMPANY COUNTRY VOTING POWER
- ------- ------- ------------
AXA France Assurance France 100% by AXA
Thema Vie France 99.6% Axiva Vie
AXA-Colonia Konzern AG (AXA-
CKAG) Germany 39.7% by Vinci BV, 25.6% by
Kolnische Verwaltungs and
9.4% by AXA
Finaxa Belgium Belgium 100% by AXA
AXA Belgium Belgium 86.1% by Royale Belge and 13.9%
by Parcolvi
De Kortrijske Verzekering Belgium 99.8% by AXA Belgium
Juris Belgium 100% owned by AXA Belgium
Royale Belge Belgium 51.2% by AXA Holdings Belgium,
44.5% AXA and 3.2% AKA Global
Risks
Royale Belge 1994 Belgium 97.8% by Royale Belge and 2%
by UAB
UAB Belgium 100% 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 IARD
Royale Belge Re Belgium 100% by Royale Belge
Parcolvi Belgium 100% by Vinci Belgium
Holding BV
Vinci Belgium Belgium 99.5% by Vinci BV
Finaxa Luxembourg Luxembourg 100%
AXA Assurance IARD Luxembourg Luxembourg 100% by AXA Holding Luxembourg
AXA Assurance Vie Luxembourg Luxembourg 100% by AXA Holding Luxembourg
Royale UAP Luxembourg 100% by AXA Holding Luxembourg
Paneurolife Luxembourg 90% by different companies of
the AXA Group
Paneurore Luxembourg 100% by different companies of
the AXA Group
C-18
<PAGE>
Crealux Luxembourg 100% by Royale Belge
Futur Re Luxembourg 100% by AXA Global Risks
AXA Holding Luxembourg Luxembourg 100% by Royale Beige
AXA Aurora Spain 30% owned by AXA and 40%
by AXA Participations
Aurora Vida SA de Seguros y Spain 97% owned by Aurora Iberica SA
Reaseguros de Seguros y Reaseguros
1.5% by AXA
Hilo Direct Seguros y Reaseguros Spain 71.4% by AXA Aurora
Ayuda Legal Spain 88% AXA Aurora Iberica SA de
Seguros y Reaseguros and 12%
by Aurora Vida
AXA Aurora Iberica SA Spain 99.8% by AXA Aurora
de Seguros y Reaseguros
AXA Assicurazioni Italy 83.7% owned by AXA, 12% by
Grupo UAP Italiana, 2.2% by AXA
Conseil Vie and 2.1% by AXA
Collectives
Eurovita Italy 30% owned by AXA Assicurazioni
19% by AXA Conseil Vie and 19%
by AXA Collectives
Gruppo UAP Italia (GUI) Italy 97% by AXA Participants and 3%
by AXA Collectives
UAP Vita Italy 62% by AXA
Allsecures Vita Italy 100% by AXA
AXA Equity & Law plc U.K. 99.9% by AXA
AXA Equity & Law Life U.K. 100% by Sun Life Holdings Plc
Assurance Society
Sun Life lle de Man U.K. 100% owned by Sun Life
Assurance
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 and AXA
Holdings (SLPH) Equity & Law Plc
Sun Life Corporation Plc U.K. 100% by AXA Sun Life Holdings
Plc
Sun Life Assurance Society Plc U.K. 100% by AXA Sun Life Holdings
Plc
AXA Provincial Insurance U.K. 100% by SLPH
English & Scottish U.K. 100% by AXA UK
AXA UK U.K. 100% by AXA
Servco U.K. 100% by AXA Sun Life Holdings
Plc
AXA Sun Life Plc U.K. 100% by AXA Sun Life Holdings
Plc
AXA Leven The Nether- 100% by Nieuw Rotterdam
lands Verzekeringen
AXA Nederland BV The Nether- 55.4% by Royale Belge and 38.9%
lands by Gelderland BV
UNIROBE Groep BV The Nether- 100% by UAP Nieuw Rotterdam
lands Holding
C-19
<PAGE>
AXA Levensverzekeringen The Nether- 100% by UAP Nieuw Rotterdam
lands Verzekeringen
AXA Schade The Nether- 100% by UAP Nieuw Rotterdam
lands Verzekeringen
Societe Generale d'Assistance The Nether- 100% by AXA Assistance Holding
lands
Gelderland BV The Nether- 100% by Royale Belge
lands
AXA Zorg The Nether- 100% by UAP Nieuw Rotterdam
lands Verzekeringen
Vinci BV The Nether- 100% by AXA
lands
AXA Portugal Companhia de Portugal 96.2% by different companies
Serguros SA of the AXA Group
AXA Portugal Companhia de Portugal 87.6% by AXA Counseil Vie and
Serguros de Vida SA 7.5% AXA Participations
AXA Compagnie d'Assurances Switzerland 100% by AXA Participations
AXA Compagnie d'Assurances Switzerland 95% by AXA Participations
sur la vie
AXA Al Amane Assurances Morocco 52% by AXA Participations and
15% by Empargne Croissance
AXA Canada Inc. Canada 100% by AXA
Empargne Croissance Morocco 99.3% by AXA Al Amane
Assurances
Colonia Nordstern Leben Germany 50% by AXA - CKAG and 50% by
Colonia Nordstein Versicherungs
Kolnische Verwaltungs Germany 67.7% by Vinci BV, 23% by AXA
Colonia Konzern AG and 8.8% by
AXA
Sicher Direkt Versicherung Germany 50% by AXA Direct and 50% by
AXA - CKAG
AXA Colonia Krankenversicherung Germany 51% by AXA - CKAG, 39.6% by AXA
Colonia Lebenversicherung and
12% by Deutsche
Arzleversicherung
Colonia Nordstern Versicherungs Germany 100% by AXA - CKAG
C-20
<PAGE>
COMPANY COUNTRY VOTING POWER
- ------- ------- ------------
AXA non life Insurance Cy. Ltd Japan 100% by AXA Direct
AXA Life Insurance Japan 100% by AXA
Dongbu AXA Life Korea 50% by AXA
Insurance Co. Ltd.
Sime AXA Berhad Malaysia 30% owned by AXA and
AXA Reassurance
AXA Insurance Investment Singapore 88.7% by AXA and 11.4% by AXA
Holdings Pte Ltd Courtage IARD
AXA Life Insurance Singapore 100% owned by AXA
AXA Insurance Hong Kong 82.5% owned by AXA Investment
Holdings Pte Ltd and 17.5% by
AXA
National Mutual Asia Ltd Hong Kong 53.8% by National Mutual
Holdings, Ltd and 20% by Detura
The Equitable Companies U.S.A. 43% by AXA, Financiere 45,
Incorporated 3.2%, Lorfinance 6.4%, AXA
Equity & Law Life Association
Society 4.1% and AXA
Reassurance 2.9% and 0.4% by
Societe Beaujon
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 42.1% by AXA and 8.9% by AXA
Equity & Law Life Assurance
Society
The National Mutual Life Australia 100% owned by National Mutual
Association of Australasia Holdings Ltd
National Mutual International Australia 100% owned by National Mutual
Holdings Ltd
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
Detura Hong Kong 75% by National Mutual Holdings
AXA Insurance Pte Ltd Singapore 100% by AXA Insurance
Investment Holdings Pte Ltd
AXA Reinsurance Asia Pte Ltd Singapore 100% by AXA Reassurance
C-21
<PAGE>
COMPANY COUNTRY VOTING POWER
- ------- ------- ------------
AXA Reassurance France 100% owned by AXA, AXA
Assurances IARD and AXA Global
Risks
AXA Re Finance France 79% owned by AXA Reassurance
AXA Cessions France 100% by AXA
AXA Reinsurance U.K. Plc U.K. 100% owned by AXA Re U.K.
Holding
AXA Re U.K. Company Limited U.K. 100% owned by AXA Reassurance
AXA Reinsurance Company U.S.A. 100% owned by AXA America
AXA America U.S.A. 100% owned by AXA Reassurance
AXA Global Risks US U.S.A. 96.4% by AXA Global Risks and
3.6% by Colonia Nordstern
Versicherungs AG
AXA Re Life Insurance Company U.S.A. 100% owned by AXA America
C.G.R.M. Monaco 100% owned by AXA Reassurance
Nordstern Colonia Osterreich Austria 88.5% by Colonia Nordstern
Versicherungs and 11.5% by
Colonia Nordstern Leben
Royale Belge International Belgium 100% by Royale Belge
Investissement
AXA Holding Belgium Belgium 75% by AXA, 17.7% by AXA Global
Risks and 7.4% by various
companies of the Group
Assurances de la Poste Belgium 50% by Royale Belge
Assurances de la Poste Vie Belgium 50% by Royale Belge
AXA Asset Management LTD U.K. 91% by AXA Investment Managers
and 9% by National Mutual Funds
Management
AXA Sun Life Holdings Plc U.K. 100% by SLPH
C-22
<PAGE>
AXA FINANCIAL BUSINESS
COMPANY COUNTRY VOTING POWER
- ------- ------- ------------
Compagnie Financiere de Paris France 100% AXA and the Mutuelles
(C.F.P.)
AXA Banque France 98.7% owned by Compagnie
Financiere de Paris
AXA Credit France 65% owned by Compagnie
Financiere de Paris
AXA Gestion FCP France 100% owned by AXA Investment
Managers Paris
Sofapi France 100% owned by Compagnie
Financiere de Paris
Soffim Holding France 100% owned by Compagnie
Financiere de Paris
Sofinad France 100% by Compagnie
Financiere de Paris
Banque des Tuileries France 100% by Compagnie
Financiere de Paris
Banque de marches et France 18.5% by AXA and 8.2% by AXA
d' arbitrage Courtage, IARD
AXA Investment Managers France 100% by various companies
AXA Investment Managers Paris France 100% owned by AXA Investment
Managers
Colonia Bausbykasse Germany 66.7% by AXA-CKAG and 31.1% by
Colonia Nordstern Leben
Banque IPPA Belgium 99.9% by Royale Belge
Royal Belge Investissement Belgium 100% by Royale Belge
ANHYP Belgium 98.8% by Royale Belge
AXA Sun Life Asset Management U.K. 66.7% owned by SLPH and 33.3%
by AXA Asset Management Ltd.
C-23
<PAGE>
COMPANY COUNTRY VOTING POWER
- ------- ------- ------------
Alliance Capital Management U.S.A. 57.7% held by ELAS
Donaldson Lufkin & Jenrette U.S.A. 70.9% owned by Equitable
Holdings Corp. and ELAS
National Mutual Funds Australia 100% owned by National
Management (Global) Ltd Mutual Holdings Ltd
C-24
<PAGE>
AXA REAL ESTATE BUSINESS
COMPANY COUNTRY VOTING POWER
- ------- ------- ------------
S.G.C.I. France 100% by AXA
Transaxim France 100% owned by Compagnie
Parisienne de Participations
Compagnie Parisienne de France 100% owned by Sofinad
Participations (C.P.P.)
Monte Scopeto France 100% owned by Compagnie
Parisienne de Participations
Colisee Jeuneurs France 99.9% by Colisee Suresnes
Colisee Delcasse France 100% by Colisee Suresnes
Colisee Victorie France 99.7% by S.G.C.I.
Colisee Suresnes France 100% by Various Companies and
the Mutuelles
Colisee 21 Matignon France 99.4% by SGCI and 0.6% by AXA
C-25
<PAGE>
COMPANY COUNTRY VOTING POWER
- ------- ------- ------------
Colisee Saint Georges France 100% by SGCI
AXA Millesimes France 92.9% owned by AXA and the
Mutuelles
AXA Immobiller France 100% by AXA
C-26
<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 following entities are not included in this chart because, while they
have an affiliation with The Equitable, their relationship is not the
ongoing equity-based form of control and ownership that is characteristic
of the affiliations on the chart, and, in the case of the first two
entities, they are under the direction of at least a majority of "outside"
trustees:
The Hudson River Trust
EQ Advisors Trust
Separate Accounts
5. This chart was last revised on March 15, 1999.
C-27
<PAGE>
Item 27. Number of Contractowners.
As of March 31, 1999 the number of participants in the
American Dental Association Members Program offered by the Registrant was
10,235.
Item 28. Indemnification
(a) Indemnification of Principal Underwriter: to the extent
permitted by law of the State of New York and subject to all
applicable requirements thereof, Equico Securities, Inc.
("Equico") undertook to indemnify each of its directors and
officers who is made or threatened to be made a party to any
action or proceeding, whether civil or criminal, by reason
of the fact that he or she is or was a director or officer
of Equico.
(b) Undertaking: insofar as indemnification for liability
arising under the Securities Act of 1933 may be permitted to
directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other
than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or
controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of
its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against
public policy as expressed in the Act and will be governed
by the final adjudication of such issue.
Item 29. Principal Underwriters
(a) EQ Financial Consultants, Inc. ("EQFC")(formerly Equico
Securities, Inc.), a wholly-owned subsidiary of Equitable is
the principal underwriter for Equitable's Separate Account
No. 301, Separate Account A, Separate Account I and Separate
Account FP. EQFC's principal business address is 1290 Avenue
of the Americas, New York, NY 10104.
(b) See Item 25.
(c) Not applicable.
C-28
<PAGE>
Item 30. Location of Accounts and Records
The records required to be maintained by Section 31(a) of the
Investment Company Act of 1940 and Rules 31a-1 to 31a-3
promulgated thereunder, with respect to the separate accounts
named in Item 29(a),are maintained by The Equitable Life
Assurance Society of the United States at 135 West 50th
Street, New York, New York 10020; 1290 Avenue of the Americas,
New York, New York 10104; and 200 Plaza Drive, Secaucus, New
Jersey 07094
Item 31. Management Services
Not applicable.
Item 32. Undertakings
The Registrant hereby undertakes:
(a) to file a post-effective amendment to this
registration statement as frequently as is necessary
to ensure that the audited financial statements in
the registration statement are never more than 16
months old for so long as payments under the
variable annuity contracts may be accepted;
(b) to include either (1) as part of any application to
purchase a contract offered by the prospectus, a
space that an applicant can check to request a
Statement of Additional Information, or (2) a
postcard or similar written communication affixed to
or included in the prospectus that the applicant can
remove to send for a Statement of Additional
Information;
(c) to deliver any Statement of Additional Information
and any financial statements required to be made
available under this Form promptly upon written or
oral request.
C-29
<PAGE>
SIGNATURES
As required by the Securities Act of 1933, the Registrant
has caused this Registration Statement to be signed on its behalf, in the City
and State of New York, on the day of April, 1999.
THE EQUITABLE LIFE ASSURANCE
SOCIETY OF THE UNITED STATES
(Registrant)
By: The Equitable Life Assurance
Society of the United States
By: /s/ Maureen K. Wolfson
------------------------------
Maureen K. Wolfson
Vice President
C-30
<PAGE>
SIGNATURES
As required by the Securities Act of 1933, the Depositor has caused
this Registration Statement to be signed on its behalf, in the City and State
of New York, on the 26 day of April, 1999.
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 Vice Chairman of the Board,
Chief Financial Officer and Director
PRINCIPAL ACCOUNTING OFFICER:
/s/ Alvin H. Fenichel
- -----------------------------
Alvin H. Fenichel Senior Vice President and
April 26, 1999 Controller
*DIRECTORS:
Francoise Colloc'h Norman C. Francis George T. Lowy
Henri de Castries Donald J. Greene Edward D. Miller
Joseph L. Dionne John T. Hartley Didier Pineau-Valencienne
Denis Duverne John H.F. Haskell, Jr. George J. Sella, Jr.
William T. Dionne Michael Hagarty Peter J. Tobin
Jean-Rene Fourtou Mary R. (Nina) Henderson Stanley B. Tulin
W. Edwin Jarmain Dave H. Williams
*/s/ Maureen K. Wolson
- -------------------------------
Maureen K. Wolson
Attorney-in-Fact
April 26, 1999
C-31
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. PAGE NO.
- ----------- --------
9(c) Opinion and Consent of Counsel
10(c) Consent of PricewaterhouseCoopers LLP.
10(d) Powers of Attorney.
C-32
<PAGE>
Exhibit 9(c)
April 26, 1999
The Equitable Life Assurance
Society of the United States
1290 Avenue of the Americas
New York, NY 10104
Dear Sirs:
This opinion is furnished in connection with the Form N-4 Registration
Statement of The Equitable Life Assurance Society of the United States
("Equitable") under the Securities Act of 1933, as amended (the "Act"), relating
to separate account units of interest ("Units") under a group annuity contract,
as amended, issued by Equitable to the Trustees of the American Dental
Association Members Retirement Trust and of the American Dental Association
Members Pooled Trust for Retirement Plans (the "ADA Contract") (the separate
accounts included in the ADA Contract being referred to herein collectively as
the "Separate Accounts"). The ADA Contract is designed to provide benefits under
retirement plans and trusts adopted by members of the American Dental
Association for themselves and their employees. Such plans and trusts will be
qualified under Section 401 of the Internal Revenue Code of 1986, as amended.
The securities being registered are to be offered in the manner described in the
Registration Statement covering up to $130 million of the plan contributions to
be received under the ADA Contract.
I have examined all such corporate records of Equitable and such other
documents and such laws as I consider appropriate as a basis for the opinion
hereinafter expressed. On the basis of such examination, it is my opinion that
1. Equitable is a corporation duly organized and validly existing under
the laws of the State of New York.
2. The Separate Accounts were duly created pursuant to the provisions
of the New York Insurance Law.
<PAGE>
The Equitable Life Assurance
Society of the United States
April 26, 1999
Page 2
3. Assets allocated to the Separate Accounts are owned by Equitable;
Equitable is not a trustee with respect thereto. Under New York
State law, the income, gains and losses, whether or not realized,
from assets allocated to a Separate Account must be credited to or
charged against such Account, without regard to the other income,
gains or losses of Equitable.
4. The ADA Contract provides that the portion of the assets of the
Separate Accounts equal to the reserves and other contract
liabilities with respect to the Separate Accounts shall not be
chargeable with liabilities arising out of any other business
Equitable may conduct.
5. The ADA Contract and the Units issued thereunder have been duly
authorized; and the ADA Contract constitutes, and the Units when
issued thereunder will constitute, validly issued and binding
obligations of Equitable in accordance with their terms.
I hereby consent to the use of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ Mary Joan Hoene
------------------------------------
Mary Joan Hoene
Vice President and Counsel
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Statement of Additional Information
constituting part of this Registration Statement on Form N-4 (the "Registration
Statement") of (1) our reports dated February 8, 1999 relating to the financial
statements of Separate Account Nos. 4, 191 and 200 of The Equitable Life
Assurance Society of the United States for the year ended December 31, 1998; (2)
our reports dated February 12, 1999 relating to the financial statements of
Separate Account Nos. 8 and 30 of The Equitable Life Assurance Society of the
United States for the year ended December 31, 1998; and (3) our report dated
February 8, 1999 relating to the consolidated financial statements of The
Equitable Life Assurance Society of the United States for the year ended
December 31, 1998, which reports appear in such Statement of Additional
Information, and to the incorporation by reference of our reports into the
Prospectus which constitutes part of this Registration Statement. We also
consent to the use in the Prospectus Supplement constituting part of this
Registration Statement of our report dated February 8, 1999 relating to the
financial statements of Separate Account No. 4 of The Equitable Life Assurance
Society of the United States for the year ended December 31, 1998, which report
appears in such Prospectus Supplement. We also consent to the references to us
under the headings "Condensed Financial Information" and "About our independent
Accountants" in the Prospectus.
PricewaterhouseCoopers LLP
New York, New York
April 23, 1999
<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, 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 hand this 16th day
of February, 1999.
/s/ Henri de Castries
---------------------
Henri de Castries
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
Director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Jerome S. Golden, 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 hand this 10th day
of February, 1999.
/s/ Joseph L. Dionne
--------------------
Joseph L. Dionne
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
Director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Jerome S. Golden, 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 hand this 6th day
of February, 1999.
/s/ Denis Duverne
-----------------
Denis Duverne
<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, 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 hand this 18th day
of February, 1999.
/s/ F. COLLOC'H
---------------
F. COLLOC'H
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
Director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Jerome S. Golden, 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 hand this 8th day
of February, 1999.
/s/ Jean Rene Fourtou
---------------------
Jean Rene Fourtou
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
Director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Jerome S. Golden, 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 hand this 8th day
of February, 1999.
/s/ Norman C. Francis
---------------------
Norman C. Francis
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
Director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Jerome S. Golden, 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 hand this 15th day
of February, 1999.
/s/ Donald J. Greene
--------------------
Donald J. Greene
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
Director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Jerome S. Golden, 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 hand this 11th day
of February, 1999.
/s/ John T. Hartley
-------------------
John T. Hartley
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
Director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Jerome S. Golden, 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 hand this 10th day
of February, 1999.
/s/ John H.F. Haskell, Jr.
--------------------------
John H.F. Haskell, Jr.
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
Director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Jerome S. Golden, 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 hand this 10th day
of February, 1999.
/s/ Michael Hegarty
-------------------
Michael Hegarty
<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, 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 hand this 10th day
of February, 1999.
/s/ Mary R. (Nina) Henderson
----------------------------
Mary R. (Nina) Henderson
<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, 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 hand this 5th day
of February, 1999.
/s/ W. Edwin Jarmain
--------------------
W. Edwin Jarmain
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
Director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Jerome S. Golden, 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 hand this 5th day
of February, 1999.
/s/ George T. Lowy
------------------
George T. Lowy
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
Director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Jerome S. Golden, 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 hand this 10th day
of February, 1999.
/s/ Edward D. Miller
--------------------
Edward D. Miller
<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, 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 hand this 22th day
of February, 1999.
/s/ Didier Pineau Valencienne
-----------------------------
Didier Pineau Valencienne
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
Director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Jerome S. Golden, 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 hand this 5th day
of February, 1999.
/s/ George J. Sella, Jr.
------------------------
George J. Sella, Jr.
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
Director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Jerome S. Golden, 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 hand this 10th day
of February, 1999.
/s/ Stanley B. Tulin
--------------------
Stanley B. Tulin
<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, 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 hand this 7th day
of February, 1999.
/s/ Dave H. Williams
--------------------
Dave H. Williams
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
Director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Jerome S. Golden, 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 hand this 25th day
of March, 1999.
/s/ Peter J. Tobin
------------------
Peter J. Tobin
